The tax overhaul passed by Congress in December of 2017 changed little relating to long-term retirement matters. However, one change could have a major impact on Georgia residents hoping to retire soon. Specifically, the tax overhaul eliminates so-called do-overs for Roth IRA conversions. Under the prior law, an individual could convert a traditional IRA to a Roth IRA and then avoid a large tax bill by converting it back to a traditional IRA by October of the following year.
The changes to federal income taxes passed late in 2017 have left some people in Georgia wondering what to withhold from their paychecks. The Internal Revenue Service has issued new withholding tables, but the agency has not yet had a chance to provide employers with new W-4 forms. Although employers may apply information from their workers' existing W-4 forms, these forms do not match the new tax system. People might end up with miscalculated deductions from their paychecks.
Georgia taxpayers have to file their federal income tax returns on time or incur possible penalties, according to the Internal Revenue Code Section 6651. For returns that are mailed, this means making sure that they are mailed on time. The timely filing rule also applies to electronically filed returns. However, there are reasons that an e-return may be sent back.
Georgia residents who are the victims of financial abuse at the hands of their partners may be given relief by the IRS. For instance, an individual might apply for innocent spouse relief. If granted, that person will not be held liable for taxes owed on a joint return. This may be true if there was a balance because the other spouse deliberately withheld income.
Tax planning is something that savvy Georgia residents are aware of year-round, but it becomes especially relevant at the end of the calendar year. For individuals thinking about these issues when the end of the current year approaches, there are a number of things that might be done to minimize tax liability or to take advantage of available incentives and tax breaks.
The end of the calendar year is generally a time of celebration and cheer for Georgia residents. However, the end of the holiday season usually means the beginning of the tax season. While this may be a busy time for accountants and taxpayers, the IRS has tried to make the season easier to manage. For starters, the agency recommends that individual and business taxpayers gather relevant documents as soon as possible.
Some workers receive severance pay from their employer. It may be as the result of being terminated, being laid off or leaving a position. Regardless of why a person received such pay, the IRS views it as wage income subject to tax. Therefore, that payment may be subject to employment taxes and deductions that may apply even if it is received in a settlement years after leaving the company.
When individuals in Georgia buy and sell real estate or business assets, capital gains taxes could be a costly concern. Solutions could emerge with planning and patience because an Internal Revenue Code Section 1031 exchange or irrevocable trust provides the legal instrument for navigating around taxes under the right circumstances.
Many Georgians own vacation homes and might wonder if they might face tax consequences if they choose to rent them out when they are not using them. It can be smart to recoup some of the expenses that people incur with the maintenance costs, mortgages and property taxes of vacation homes through renting them when they are not in use. However, the owners should be aware of the ways that the IRS treats rental income that is derived from such rentals.
The gains generated by the sale of a primary residence can be significant, but this income is not subject to federal income tax in many situations. Georgia residents may qualify for this exclusion by establishing ownership and use. This is done by establishing that they have owned the property in question and used it as their primary residence for at least two of the five years preceding the sale.