Four Reasons Why Kansas City Taxpayers Should File Taxes Early

Four Reasons Why Kansas City Taxpayers Should File Taxes Early

As of this writing, the federal government is STILL in its partial shutdown.

And 800,000+ people are affected — including a whole slew of IRS workers who have been called in, regardless of paychecks, because come Trump or high water: tax filing will indeed begin on January 28th, 2019.

So, we’re still buckling up around here, and meeting with Kansas City clients to get things lined up with as many legal, ethical deductions as possible so that YOU pay only what you should … and not a penny more.

And at least some of those IRS employees were responsible for the (very welcomed) announcement that the IRS will, in most cases, waive the tax underpayment penalty for any taxpayer who paid at least 85 percent of their total 2018 tax liability during the tax year. The normal threshold is 90%, so this might be a relief to some.

And it means that all of the ballyhoo (which we joined) that warned people to make sure their withholding was set up properly gets a little less loud.

But all of that said, it is still extremely wise to get your tax paperwork together as soon as humanly possible, well … because of four big reasons.

Three Reasons Why Kansas City Taxpayers Should File Taxes Early

“You cannot escape the responsibility of tomorrow by evading it today.” – Abraham Lincoln

If you ever procrastinated in high school or college (is that even a question?), then you know the ramifications: sloppy work, late penalties and reduced grades/knowledge.

Why was it always “easier” to wait until the night before on certain projects, when you had so many days before to work and prepare?

In an age of distraction, it’s natural to occupy your time with meaningless tasks and time-wasting activities … and today we want to look at why you should make time to file taxes early this year.

Quicker refund? I.R.Yes.

As I mentioned above, tax filing officially begins on Monday, January 28th. But that doesn’t mean that we can’t start our prep work even before that date.

In fact, it might be obvious, but you WILL receive your tax refund (if you qualify for one) faster, the earlier you decide to file. So although the deadline to file your taxes is April 15, 2019, start making plans now to send in your paperwork.

And as always, we will guide you through the tax filing process — we are on top of every detail that will get you your refund as soon as possible.

Avoid unnecessary penalties

We love helping Kansas City people like you take care of business, so that you don’t receive penalties or unwanted interest rates for missing a deadline.

Unfortunately, those who file their taxes after the deadline receive penalties simply for being lazy and disorganized more than anything.

If you typically wait until April to act, and have gotten away with cutting it close until now, let us help you get into the habit of filing early so you can rest easy come springtime.

Let us be your laziness remedy.

The biggest reason: Avoid the risk of fraud

Your information online is at an ever-increasing risk of theft (a great reason to regularly change your passwords and make them at least somewhat intricate … come on, people). And if someone somehow gets a hold of your Social Security number, they wouldn’t be far from acquiring all the info necessary to file a tax return under your name illegally.

The sooner YOUR returns are filed means the less risk for someone to hack your information, and take YOUR money. Identity theft is the last thing we want to see happen to you, but if it does happen please contact us immediately and we will walk you through the next steps.

This is a time of year that it’s worth checking your credit report for any fraudulent activity from any of the three major credit bureaus: Experian, TransUnion and Equifax.

And as I always tell you: Do NOT respond to any emails or text messages from anyone who says they’re with the IRS, as the organization typically makes first contact with individuals through phone or traditional mailed correspondence. No IRS representative will ask for immediate payment via phone call. Let us handle your correspondence with the IRS on your behalf.

So in the spirit of the new year and making changes to better your future, let us help you set a new yearly trend: turning in your homework early so you don’t get bad grades.

If you have any questions please feel free to shoot me back an email through the email us button at the top of the page.

 

Warmly,

 

Kyle Nagy

(816) 272-8151

Kyle P Nagy, CPA

Understanding Your Kansas City Airbnb And Taxes

Understanding Your Kansas City Airbnb And Taxes

As of this writing, the federal government is still in a “partial shutdown”, and things are starting to fray around the edges, even for those whose paychecks aren’t being affected. Already, it’s the longest in history.

Which, for a media starving for any kind of controversy … well, no doubt you’ve already heard about it.

Who knows … by the time you get this, things could be back to “normal” (is that word even operative these days?), but here’s one thing that won’t stop during this shutdown, however long it lasts: your taxes.

That’s right, the IRS confirmed last week that they will remain operational during the shutdown, your taxes will STILL be due this year (including your estimated ones, if that applies to you), and the official start of tax filing begins on January 28th. But refunds might yet be affected. We’ll keep you posted.

All this shutdown business aside, but while we’re still on the subject of taxes, I have been meaning to write on this topic for some time now, as more and more of our Kansas City clients are affected by it.

I’m talking about Airbnb, VRBO and the like. Because if you’re not careful, you could be creating for yourself a tax and financial headache.

Understanding Your Kansas City Airbnb And Taxes

“Travel makes one modest. You see what a tiny space you occupy in the world.” -Gustav Flaubert

Have you ever wondered why vacation rental home services like Airbnb or VRBO are so popular? It’s not because of refrigerators stocked with free food. Trust me … I check (every time). Not surprisingly, the reason for their surge in popularity is demand.

There are many reasons why that’s the case, too many to go into here. Needless to say, the model works.

And one of the reasons it works is because it works for the hosts.

So, let’s take a look at a few things you need to consider before you start making side income through renting out your home…

14: The Goldilocks Number

13 is too few, 15 is too many … but 14 days is just right, and here’s why:

If you rent out a dwelling unit (a residence you live at longer than 14 days/year or at least 10% of the days you rent it to others at a fair rental price) through an online service, and the amount of days rented out equals 14 or less, you don’t have to report any of the rental income (but nor can you deduct expenses as rental expenses). This same 14-day rule applies the same if you only rent out one room of your dwelling unit. Not paying tax on a couple weeks worth of vacation rental income is a sweet deal, all while putting a roof over someone’s head.

The 14-day-and-under rule is a great option if the area where you live hosts a major event or two throughout the year that brings in the masses. But if hosting an increased amount of visitors (for an increased amount of income … and taxes) doesn’t phase you, then book away to 15 days and beyond.

If the IRS comes knocking at your door because you didn’t include the income on your return, all you’ll need to do is prove the income was within the 14-day rule. You’re all set.

Record Everything … In Detail

If you have never started a business, but like the thought of doing so one day … running a short-term vacation rental can be your training wheels. Keeping detailed notes and records of the days you rent out the space is an important aspect of this decision (tracking whether you remain under, or exceed the 14-day rule).

If you do end up taking the plunge to rent out your Kansas City home beyond that 14-day period, then, you have the opportunity to deduct ordinary and necessary expenses. Towels, toiletries, ten-dollar bottles of wine to greet your guests upon arrival: all can be deducted from your rental income.

The more detailed you are at keeping records for this “bed and breakfast” business, the less you need to worry about scrounging up proof for the IRS.

Important to Note: If you don’t fill out a W-9 form that most vacation rental sites require at the beginning of operation, you are subject to lose 28% of your rental income.

Go the Extra Mile

Vacation rental services charge a service fee to their paying customers — you might have noticed this at checkout if you’ve ever booked online. When companies like Airbnb send hosts (potentially you!) their 1099 form which includes the amount of service fees accrued in addition to rental income for the year, hosts have the opportunity to deduct the host service fees if they rented out their space more than 14 days during the year.

And while you are in the business of serving others by opening your space, we encourage you to be the hostess with the mostest and offer amenities like breakfast and toiletries. Why? Because it’s nice. ALSO, because the IRS might treat you as self-employed if you do.

Self-employment means paying self-employment taxes in addition to income tax. But there are a host of other benefits to be had from having your own “business”, with other tax implications, etc. But that is an article for another day. 🙂

Lastly, in your quest to make a little extra income this year and serve travelers from all over, let us remind you that life is more than earning 5-star reviews … it’s mostly about walking into a room with hot coffee provided. We trust you’ll make that happen. 🙂

I hope this helps. There are additional tax rules to be aware of, and we can help you apply the available deductions in the most tax-advantageous way possible.

 

Warmly,

 

Kyle Nagy

(816) 272-8151

Kyle P Nagy, CPA

What Do I Need To File My Taxes For 2019? Here’s Kyle Nagy’s Checklist

What Do I Need To File My Taxes For 2019? Here’s Kyle Nagy’s Checklist

Oh, you thought that calendar on your phone was accurate, did you? You thought 2018 was DONE WITH. OVER. (Hurrah)?

Whoops. The fact is that over the following weeks and months, you will be reliving all of your financial decisions from 2018 while we put together your tax return.

We can’t go back and undo any bad decisions, but we can certainly help you recover from them.

And also, in case you’re wondering, yes, the government shutdown might affect tax season. We’re still waiting on this one, with you. The IRS *just* announced that they WILL be issuing refunds during the shutdown, but it is yet to be seen how effective this will be. The filing deadline might even be impacted, as yet to be determined.

But you should make every effort to get your returns filed as early as possible, especially if you are expecting a refund. There are many reasons for this, from preventing fraud to simple peace of mind.

And of course, you already have an expert Kansas City tax professional in your corner who can help with that.

Or you can do all of this on your own.

It can take you a LONG time (if you file yourself), or you can press that easy button and allow us to do it all on your behalf.

Either way, we’re beginning this process, and we’re looking forward to walking with you through it.

It might even be … fun?

What Do I Need To File My Taxes For 2019? Here’s Kyle Nagy’s Checklist

“Scar tissue is stronger than regular tissue. Realize the strength, move on.” – Henry Rollins

With all of the changes every year (and, of course, that’s especially true THIS year), filing your taxes on your own is not for the faint of heart. That’s even with nice-looking software on the market which purport to make it easy for you.

But that’s what we’re here for. Let us make it easy for you. If you’re asking yourself, “What do I need to file my taxes?” we’ve got you covered.

Below is a list of what you will need during the tax preparation process. Not all of them will apply to you — probably MOST will not. Nonetheless, it’s a useful checklist.

Before you get overwhelmed: yes, this is a long list — but it’s the unfortunate reality of our tax code that it’s not even comprehensive! But these items will cover 95% of our clients. Really, this is for ensuring that we’re able to help you keep every dollar you can keep under our tax code.

Also note: Certain deductions went away this year, that we’re used to handling on behalf of our clients. And some that you might be used to as well. This list has changed a little, and I’ve notated additional changes coming down the pike.

But again … we will be your guide. That’s what we’re here for.

Even if for some strange reason you won’t be using our cost-effective services this year, feel free to use this list as a handy guide…

Personal Data
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number

Employment & Income Data
W-2 forms for this year
Tax refunds and unemployment compensation: Form 1099-G
Miscellaneous income including rent: Form 1099-MISC
Partnership and trust income
Pensions and annuities
Alimony received
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
Unemployment compensation

Health Insurance Information

NOTE — despite the passage of tax reform that changes this information for future tax years, we still need it for 2018 taxes.

* All 1095-A Forms from Marketplace providers (if you purchased insurance through a Marketplace)
* Existing plan information (policy numbers, etc.)
* If claiming an exemption, your unique Exemption Certificate Number
* Records of credits and/or advance payments received from the Premium Tax Credit (if claiming)

Homeowner/Renter Data
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Moving expenses (note: only applies if you were in the armed forces in 2018)

Financial Assets
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses

Financial Liabilities
Auto loans and leases (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits

Automobiles
Personal property tax information
Department of Motor Vehicles fees

Expenses
Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Investment expenses
Job-hunting expenses
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Adoption expenses
Alimony paid (note: this deduction will no longer be in place in 2019)

Self-Employment Data
Estimated tax vouchers for the current year
Self-employment tax
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
Farm income

Deduction Documents
State and local income taxes (note: $10,000 limit on these for 2018)
IRA, Keogh and other retirement plan contributions
Medical expenses
Other miscellaneous deductions

An important thing to understand is that we will guide you through the process, and that although much has changed this year, we are on top of these changes on your behalf.

We’re here to help. Let me know if you have any questions.

Warmly,

 

Kyle Nagy

(816) 272-8151

Kyle P Nagy, CPA

Kyle Nagy’s Take On Bad Predictions By Experts

Kyle Nagy’s Take On Bad Predictions By Experts

Well, we’re staring into the fresh light of 2019 — and that means that we can now take a good, dispassionate look back at our progress towards what we were aiming for in 2018. Which leads to the big question: How was your 2018?

I often believe that reviewing your year is better than setting goals — because resolutions are so often and easily ignored, that laughing at them has become an internet meme.

But reviewing where you’ve been, and how what actually happened for you might fit into your long-term vision (i.e. not just within the micro-span of one year), can reveal to you missed opportunities, good (and bad) choices, and the kinds of life-rhythm adjustments you can make. And these can be even more powerful than goals … because you already have the “lab results” of 2018 from which to base a change.

I would caution you not to play the blame game with anyone but yourself, if things didn’t go the way you would want. You are the only thing you can truly control, after all.

So review your year, and let’s figure out how we can work together to help you change what’s needed, and amplify what worked well.

I also know that we are “enjoying” a healthy dose of expert opinion this week, making predictions for the new year. But here’s the thing: history is littered with the detritus of bad predictions made by individual experts.

I prefer the wisdom of crowds, markets, trends and real-world statistics.

Well, in light of all those who are predicting this and that about the political, economic, and cultural landscape, I thought I’d provide a bit of a light-hearted takedown of “expert opinion”. These are some of my favorites…

Kyle Nagy’s Take On Bad Predictions By Experts

“The only disability in life is a bad attitude.” – Scott Hamilton

“The Americans have need of the telephone, but we do not. We have plenty of messenger boys.”
-Sir William Preece, chief engineer at the British Post Office, 1878

“Who the hell wants to hear actors talk?”
-H.M. Warner, Warner Bros., 1927

“I think there is a world market for maybe five computers.”
-Thomas Watson, chairman of IBM, 1943

“Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.”
-Darryl Zanuck, 20th Century Fox, 1946

“The world potential market for copying machines is 5,000 at most.”
-IBM executives to the eventual founders of Xerox, 1959

“There is no reason anyone would want a computer in their home.”
-Ken Olsen, founder of mainframe-producer Digital Equipment Corp., 1977

“No one will need more than 637 kb of memory for a personal computer — 640K ought to be enough for anybody.”
-Bill Gates, Microsoft, 1981

“Next Christmas the iPod will be dead, finished, gone, kaput.”
-Sir Alan Sugar, British entrepreneur, 2005

Oh, this from a 1995 NYT book review of a book telling everyone how technology really wouldn’t change the world:

“In the electronic library of the future, you won’t be able to browse through the stacks, although, [the author, Clifford Stoll] adds, given the immensity of the task, the prospect of digitizing all books is probably beyond realization. The flow of bits can be surprisingly slow under certain circumstances. Even the dream of video on demand is unrealizable, [Stoll] writes. ‘It’s a surprisingly tough engineering job, keeping a thousand movies ready for instant retrieval.’ “

from a NYT review of “Second Thoughts on the Information Highway” by Clifford Stoll, Doubleday, 1995

As computer scientist Alan Kay said, “The best way to predict the future is to invent it.”

 

Kyle Nagy

(816) 272-8151

Kyle P Nagy, CPA

Kyle P Nagy, CPA’s Holiday Prayer

As you probably know if you are paying any kind of attention to events OUTSIDE of Kansas City (which, this week, you’d certainly be sane if you DIDN’T pay attention to the national news), the government is in “shutdown mode”.

This means that unless the President and Congress can come together on a budget agreement, a slew of government agencies will be minimally staffed (which might even affect us here in Kansas City), and all kinds of things will be affected — not least of which will be the 800,000 or so federal employees who will be going without pay. We’ll keep you posted.

As for the IRS itself, we’re hearing noises (though nothing definite) that the filing season might be affected, at least in terms of refunds. Certainly there will be no refunds being issued DURING the shutdown, because the agency will be restricting itself to actions that are “Necessary for the Safety of Human Life or Protection of Government Property The Budget Enforcement Act of 1990 amended the Anti-Deficiency Act.”

We can spend days sorting through what that actually means, but basically these are IRS activities that help the agency collect money, as best it can in shutdown situations, to keep the rest of the federal government going.

And without going into a list, there are plenty of things the IRS will NOT be doing during a shutdown, specifically those “regular, ongoing functions whose suspension would not pose an imminent threat to life and property.” Basically things that the IRS has determined aren’t key to the agency’s job of collecting taxes.

So that’s that, I suppose.

But even within this holiday season full of conflict and shutdown, I’m ever more encouraged to see outside of my own situation, and practice empathy for those around me — both here in Kansas City and around the country.

And as the years go along, I’m increasingly aware of how this holiday season is a time of joy for many, as well as a time of pain for a significant portion of my contacts as well. Missing loved ones, loneliness, and pain can sometimes be the most prominent decorations of this season, and if that’s the case for you, know that you are not alone, and that you are loved and appreciated.

And not just by us here at Team Nagy, but undoubtedly by more people than you could possibly imagine. THAT is the bottom-line, real-world truth, whether you believe it or not right now.

So it’s fitting that I would leave you today with my annual holiday prayer. May it ever be true in our lives…

Kyle P Nagy, CPA’s Holiday Prayer

“People travel to wonder at the height of the mountains, at the huge waves of the seas, at the long course of the rivers, at the vast compass of the ocean, at the circular motion of the stars, and yet they pass by themselves without wondering.” -St. Augustine

“God, help us remember that the jerk who cut us off in traffic last night is a single mother who worked nine hours that day and is rushing home to cook dinner, help with homework, do the laundry and spend a few precious moments with her children.

“Help us to remember that the pierced, tattooed, disinterested young man who can’t make change correctly is a worried 19-year-old college student, balancing his apprehension over final exams with his fear of not getting his student loans for next semester.

“Remind us, Lord, that the scary-looking bum, begging for money in the same spot every day (who really ought to get a job!) is a slave to addictions that we can only imagine in our worst nightmares …

“Help us to remember that the old couple walking annoyingly slowly through the store aisles and blocking our shopping progress are savoring this moment, knowing that, based on the biopsy report she got back last week, this will be the last year that they go shopping together.

“Father, remind us each day that, of all the gifts you give us, the greatest gift is love. It is not enough to share that love with those we hold dear. Open our hearts not to just those who are close to us, but to all humanity. Let us be slow to judge and quick to forgive, show patience, empathy and love. “

Amen.

 

Kyle Nagy

(816) 272-8151

Kyle P Nagy, CPA

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