Income tax Archives - EricJohn Ltd | Tax and Accounting Services

Both the Internal Revenue Service and Minnesota’s Department of Revenue agree. Taxpayers who farm or fish for a living deserve a break this time around!

Most Individual farmers and commercial fishermen make a single estimated tax payment on Jan. 15 each year. If they don’t pay by March 1, they normally can be hit with penalties.

But, the IRS changed some rules for 2018 returns and apparently sowed some confusion into the mix for many of those taxpayers. Specifically, the IRS says it “anticipate(s) that farmers and fishermen may have difficulty accurately determining and paying their tax liability for the 2018 taxable year by March 1, 2019.”

So, now, if they missed that estimated tax payment, it’s OK. Farmers and fishers won’t face any federal penalties if they pay their full tax load by the normal April 15 deadline. The waiver does come with another form, though. Taxpayers invoking it must add IRS Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, to their 2018 tax returns. There’s a box to be checked for a waiver.

We should note that, to qualify as a commercial farmer or fisherman, at least two-thirds of his/her gross income must come from farming or fishing. For more information, see IRS Notice 2019-17 at https://www.irs.gov/pub/irs-drop/n-19-17.pdf

Following the feds, Minnesota Revenue also is willing to waive penalties. But the state tax agency is telling those taxpayers NOT to file the normal state forms for underpayment (Forms M15 or EST). Instead, they can just file their normal Minnesota M1 or M2 returns and attach the federal form – plus any tax payment, of course.

To navigate the new tax break, feel free to contact Eric and EricJohn Ltd. who is an Enrolled Agent accredited by the IRS.

Parents, that smartphone you’re carrying can do more for school shopping than reach the children at the other end of the discount store. It could be a convenient way to prove a tax break.

Many Minnesota families with children attending grade schools, high schools and home schools can subtract costs of school supplies and other expenses from incomes on state tax returns. Even better, some families with limited incomes can qualify for tax credits, the most powerful breaks available. Credits offset state taxes on a dollar-for-dollar basis.

While stocking up on pens, notebooks, erasers, calculators, etc., this month, try this tip:

o After check-out – perhaps in the car between stores – take photos of those itemized receipts with your cell phone.
o Give each picture a name to describe the purchase, such as “2015 school supplies John.”
o Place the photo in a folder in the phone’s memory, or, better, email it to yourself for saving with other tax notes. You’ll have it when you need it next April.

That little click of the phone’s camera could have a significant effect. The Minnesota subtraction can lower income on your 2015 tax return as much as $1,625 for grade school students and $2,500 for high schoolers.

How do you know which expenses will qualify and which won’t? Minnesota’s Department of Revenue offers two fact sheets to help with those details. Look online for Income Tax Fact Sheet 8, called “K-12 Education Credit and Subtraction.” Eligible expenses for home schooling are spelled out in Income Tax Fact Sheet 8a.

In case you’re wondering, that handy smartphone can help bag a tax break for education, but it can’t be one. “Cell phones” is the first item on Minnesota Revenue’s do-not-include list in the fact sheet about the K-12 deductions and credits.

Tag: Income tax

A Special Dispensation For Farmers and Fishers

PHONE TIP CAN BACK UP SCHOOL SUPPLIES DEDUCTION