Madison County's 2015 Tax Guide

TAX GUIDE

Madison County Journal , February 12, 2015

The date April 15 is as ingrainedinto our minds as birthdays andanniversaries – but may not

be associated with as many happythoughts.

The date marks the tax filing dead-line. And unless you file an extension,you are required to square up withUncle Sam on your tax responsibilitieson or prior to the mid-April date. Missthe cutoff and you could be facing stiffpenalties and interest charges.

In general, federal tax guidelinesare more straightforward than stateand local varieties, which can includevariances across income, sales andproperty taxes that you will need tolook into before filing your taxes.

WITHHOLDING THERIGHT AMOUNT

The Internal Revenue Service offersmany tip sheets and publicationsdesigned to answer your tax-relatedquestions. Find them at www.irs.gov.One of the most commonly askedquestions relates to making sure theright amount of tax is withheldthroughout the year so there is not asurprise payment due at tax time.

In most cases, you can ensure awithholding in line with your needs ifyou correctly complete all of the FormW-4 worksheets that are maintainedby your employer. It also is importantto adjust your W-4 form whenchanges occur, such as the addition ofa new dependent to your family.

WHAT YOU WILL NEEDTO FILE

Before visiting your local tax firmor sitting down to complete yourforms on your own, be sure thesematerials are available and ready toreference:

• Photo identification • Social Security cards for the tax-

payer, spouse and dependents• Birth dates for primary and sec-

ondary earners and dependents on thetax return

• Wage and earning statements (W-2, W-2G, and 1099 forms, among oth-ers) from all employers

• Interest and dividend statementsfrom banks (1099-I forms)

• A copy of last year’s federal andstate returns, if available

• Bank routing numbers andaccount numbers for direct deposit

• Other relevant information aboutincome and expenses (such as totalamount paid for day care and day careprovider identifying number or tax ID)

The date April 15 is as ingrained into our mindsas birthdays and anniversaries – but may notbe associated with as many happy thoughts.

Tax BasicsTAX GUIDE | THE FACTS

February 12, 2015, Madison County Journal

Near the end of everyyear, the InternalRevenue Service

announces the next year’s taxbrackets to much anticipationfrom taxpayers and tax preparers alike.

The adjustments are made to prevent what it labels as“bracket creep,” which happens when people are pushed intohigher income tax brackets or have reduced value from cred-its due to inflation instead of any increase in real income.Here are the 2014 taxable income brackets and rates.

(These apply to the 2014 taxes due in 2015.)

What’s Your Tax Bracket?TAX GUIDE | BY THE NUMBERS

Rate Single Married Head ofFilers Joint Household

Filers Filers

10% $0 to $0 to $0 to $9,075 $18,150 $12,950

15% $9,076 to $18,151 to $12,951 to$36,900 $73,800 $49,400

25% $36,901 to $73,801 to $49,401 to $89,350 $148,850 $127,550

28% $89,351 to $148,851 to $127,551 to$186,350 $226,850 $206,600

33% $186,351 to $226,851 to $206,601 to $405,100 $405,100 $405,100

35% $405,101 to $405,101 to $405,101 to406,750 457,600 $432,200

39.6% $406,751+ $457,601+ $432,201+Source: Internal Revenue Service


As you prepare to file your personal income taxreturn, it’s important to not overlook the records anddocumentation needed to claim the income tax ben-efit for those charitable deductions. Gone are thedays when you could claim a tax deduction withoutdocumentation for the cash you put into the offeringplate at church or the cash given to the bell ringeroutside the grocery store during the holidays.The current tax rules are very strict, requiring

written contemporaneous docu-mentation for all charitable dona-tions claimed as tax deductions. Allmonetary donations less than $250must be evidenced by either a bankrecord, e.g., cancelled check orbank or credit card statement, or awritten receipt from the charity.However, if the amount of themonetary donation is $250 or morein a single contribution, a writtenreceipt from the charity is required. It must includethe name of the charity, date of the contribution andthe contribution amount, as well as certain languageregarding the value of any goods or servicesreceived in exchange for your gift. Most goods orservices (such as a pen or coffee mug) are consid-ered insubstantial if they are small in nature; thesetoken items do not have to be disclosed. However,

if, for example, the dinner at a school’s annualfundraising event is valued at $25, your receipt forthe $100 admission ticket will reflect the $100 dona-tion reduced by the $25 of goods and services youreceived.If you make multiple gifts to the same organiza-

tion during the year, the $250 charitable receiptrequirement applies to each separate gift rather thanthe total of the gifts for the year. If your donationsare made through payroll deduction, you can rely onthe pledge card prepared by the charity and eitheryour pay stub, W-2 or a letter furnished by youremployer showing the amount withheld from yourpay and paid to a charitable organization on yourbehalf.As you gather your tax records in the next few

months, your CPA can help you gather the necessarydocumentation to properly claim the tax benefit ofyour charitable donations.

TAX GUIDE | THE DEDUCTIONS

By Donna Bruce, Partner, BKD, LLP Mississippi resi-dents are someof the most

charitable in the country. DonnaBruce

Don’t Give Away YourCharitable Deduction

February 12, 2015. Madison County Journal


You want the process to beas quick and painless as possi-ble without any big surprises.You also want to be able totrust that your tax professionalis up on all of the new lawsand will be able to completeyour taxes with 100 percentaccuracy.

Another factor in trying tofind a great tax professional iscost. According to a recentsurvey by the NationalSociety of Accountants, solotax preparers charged an aver-age of $226 for the usualitemized federal form 1040and state income-tax form lasttax season, compared with$260 for preparers at largerfirms with three or more full-time staffers.

WHY A CPA? A certified public account-

ant who specializes in per-forming individual income taxreturns may be your bestoption. To find a CPA, checkwith friends and family mem-bers for local professionalsthey have dealt with.

You also can use theAmerican Institute ofCertified Public Accountants’website tool “Find a CPA” totrack one down.

Some are more focused onbringing on business clients,so be sure to call for anappointment and ask if theCPA handles individualincome tax matters.

ENROLLEDAGENTS

Unlike CPAs, who can han-dle a variety of financialactivities, EAs focus solely ontaxes. They must have workedfor the IRS for at least fiveyears or passed exams on taxcodes and calculations.

Enrolled agents might workfor themselves or in a CPAfirm or storefront office. TheNational Association ofEnrolled Agents’ websiteoffers an online locator.

NATIONAL CHAINS

Storefront operations canbe adequate for simple,straightforward returns. Theaverage fee for a name-brandtax company client is lessthan $200, which can belower than a CPA or enrolledagent who may charge appli-cation and document-prepara-

tion fees. According to the websites

of these national tax prepar-ers, employees in franchiseoffices of the chains have usu-ally passed at least a several-week course, and work isreviewed by experiencedsupervisors.

With so many options in your neck of thewoods, how can you be sure you’re hiringthe right professional to file your taxes?

Finding a Tax PreparerTAX GUIDE | FILING

February 12, 2015. Madison County Journal

If left to the last second, putting together all therequired information for filing your annual taxescan be an overwhelming task. The best strategy fororganizing your information should be a year-round effort.

MAKE IT A HABIT Save time by completing a helpful tax organizer

as thoroughly and accurately as possible. You canfind organizers for the current tax year online.They are helpful in guiding you through questionsbased on the most recent tax laws.Business owners should consider preparing

monthly financial statements. This will help youbetter understand how your business is doingfinancially. There are plenty of professionals avail-able to help you with the process, and planningthroughout the year will make the year-end taxprocesses much easier.

ORGANIZE EARLYThe day after you file your taxes in 2015, you

should assess how well the process went for you.Was the required information hard to find? Is thereanything you can keep better track of to make fora more seamless tax season? Keep your 2014 tax return handy for reference

throughout the year and take time to review theprior year’s return. This will help you determine ifthere are changes in your situation that will affectwhat you include this year. Potential changescould include the purchase of equipment for yourbusiness or the birth of a child.

MEET WITH A PRO Meet with a tax professional after you compile

your information and complete your tax organizer.If you are preparing your own taxes, be sure toweigh the cost and your confidence level in com-pleting them in line with all legal requirements.The IRS website (irs.gov) provides free electronicfiling if you made $58,000 or less and have a rela-tively simple tax return.

Whether you’re paying a professional or completing your taxes yourself, you’ll need to compile key information. This can be difficult if you haven’t kept good track of expenses and income.

Compiling Your Information TAX GUIDE | PREPARATION


Military personnel may qualify forcertain tax deadline extensionsbecause of their service in a combatzone.

For federal tax purposes, the U.S.Armed Forces includes officers andenlisted personnel in all regular andreserve units controlled by theSecretaries of Defense, the Army,Navy and Air Force. The Coast Guard

also is included.

FREE RESOURCESMany installation legal offices oper-

ate a free tax clinic from early Januaryto mid-April, preparing and filing fed-eral and state tax returns for eligiblepersons. Visit the Armed Forces LegalAssistance Services locator athttp://legalassistance.law.af.mil/con-

tent/locator.php.The Volunteer Income Tax

Assistance program (VITA) also pro-vides free tax filing assistance. VITAsites are located on military installa-tions and across the nation.

DISABLED VETERANSAccording to the Internal Revenue

Service, disabled veterans may be eli-gible to claim a federal tax refundbased on:

• An increase in the veteran’s per-centage of disability from theDepartment of Veterans Affairs

• The combat-disabled veteranapplying for, and being granted,Combat-Related SpecialCompensation, after an award forConcurrent Retirement and Disability

To do so, the disabled veteran willneed to file an amended return, Form1040X.

The IRS also urges disabled veter-ans to include all documents from theDepartment of Veterans Affairs andany information received fromDefense Finance and AccountingServices explaining proper tax treat-ment for the current year.

For their dedication in serving the United States and its citizenry,military families and veterans are afforded special privilegeswhen tax time comes.

Tips for Military Families TAX GUIDE | SPECIAL SITUATIONS

Madison County's 2015 Tax Guide

Documents

Transcript of Madison County's 2015 Tax Guide