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Individual Tax Returns

‘Seriously Delinquent’ Tax Debt? Say ‘Bon Voyage’ to your Passport

So you’re finally ready to plan that dream trip to Paris after a year of strict financial planning? Before you book your flight, better check your latest individual income tax return and confirm you don’t owe an outstanding balance to good ol’ Uncle Sam.

Starting this year, the U.S. government will deny passport applications if the IRS certifies you’re “seriously delinquent” on a tax debt. Even if you already hold a valid passport and the IRS provides valid certification regarding your tax obligation, the State Department maintains the authority to revoke your passport.

The Fixing America’s Surface Transportation (FAST) Act requires the State Department to deny your passport application if you owe an “unpaid, legally enforceable federal tax liability” assessed by the IRS if:

  • Your outstanding balance totals more than $51,000 (including interest and penalties and adjusted annually for inflation);
  • A notice of federal tax lien has been filed and certain administrative rights have been exhausted or lapsed; or
  • A levy has been issued.

Codified as Internal Revenue Code (“IRC”) 7345, seriously delinquent tax debt is limited to liabilities under IRC and doesn’t include other outstanding IRS debts such as penalties associated with the failure to file Foreign Bank Account Reports (FBAR penalties).

To avoid passport issues and prevent your tax debt from being categorized as seriously delinquent by the State Department:

  • Arrange an installment agreement with the IRS;
  • Begin paying your tax obligation pursuant to an offer-in-compromise that has been accepted by the IRS and entered into with the Department of Justice;
  • Request a timely collection due process appeal hearing in connection with an IRS levy;
  • Apply for innocent spouse relief under IRC 6015;
  • Notify the IRS immediately:
    • if you’ve filed for bankruptcy
    • if you’re a victim of tax-related identity theft
    • if you’re located in a federally declared disaster area

Simply requesting a payment arrangement won’t prevent the IRS from denying your passport; you must already have an installment agreement in place or already hold a fully accepted offer-in-compromise to avoid passport issues.

For questions regarding your eligibility for a relief program, refer to the free IRS site, Offer in Compromise Pre-Qualifier or request a payment agreement by filing IRS Form 9465.

If you need a proven tax accounting firm to assist with your individual or business tax preparation or financial planning, our team remains ready to assist you. Contact us at or 904-396-5400.

Update Your Withholding Now to Avoid Surprises Next April

As you know, the government recently enacted the Tax Cut and Jobs Act, which made some sweeping changes to the federal income tax—and will certainly affect your individual income tax return next year.

So now’s the time to do some homework and possibly provide your employer with a new W-4, Employee’s Withholding Allowance Certificate, to change the amount withheld from your paycheck for federal income taxes.

Withholding the correct amount of tax can greatly assist in your annual budget planning, prevent an unpleasantly large tax bill, and possibly provide you with more take-home pay each pay period.

Wondering whether your 2018 paycheck will result in the right amount of taxes? Check it out yourself: the IRS recently released an updated Withholding Calculator, reflecting new tax law changes. Note that this simply serves as a calculator so you won’t need to enter any personally-identifiable information, and no information will be saved.

Before you begin to calculate possible changes, be prepared. Gather your most recent pay stubs and tax return. To determine the right balance for your federal withholding, be familiar with the employee allowance guidelines:

  • You’re entitled to one allowance for yourself and one for your spouse.
  • If you’re filing as “head of household,” you’re allowed one allowance.
  • You can claim an additional allowance if:
    • You’re single or married filing separately and have only one job;
    • If you’re married filing jointly, have only one job, and your spouse doesn’t work;
    • If your wages from a second job or your spouse’s wages (or total of both) are $1,500 or less.
  • If you claim additional dependents, you may be entitled to more allowances.

If the calculator indicates you need to make changes to your withholding, complete and submit form W-4 to your employer as soon as possible. Don’t send form W-4 to the IRS. Remember, the new withholding rates will not affect your 2017 return (filed in 2018).

If you have a more complicated tax situation, such as self-employment tax, long-term capital gains, or other complexities, this calculator probably isn’t for you. Instead, look for the IRS’ Publication 505, Tax Withholding and Estimated Tax, to be updated in early spring.

For more than three decades, Patrick & Raines CPAs has been privileged to provide complex individual and business tax return services and small business advice to help build your future.

For your tax planning and preparation, assurance needs, accounting services and more, contact us at or 904-396-5400.

The New Patrick & Raines CPAs App . . . This One’s On Us!

Ready . . .Set . . . Launch! Introducing our accounting services taken to the next level. Download our free Patrick and Raines CPA app.

Since we’re constantly moving forward to improve our client accessibility, we’re proud to announce the launch of our Patrick & Raines CPAs app, now available for iPhones, iPads and Android devices and – best of all – it’s completely free!

So the next time you need to access a third party site such as Xero, Quickbooks or the IRS, try our new app first. You’ll find up to date, important accountancy data and valuable tools at your fingertips, including:

  • Photo Receipt Management, Email and Store

Never lose a receipt again! Using our latest app, you can track receipts and expenses literally at the touch of a button. With minimal effort you can take a picture of any receipt and save it to your app. Any additional information can be added later, and receipts are stored by amount, category, and date. You can track all your expenses with ease and enable us to interact digitally with you.

  • GPS Mileage Tracking and Management Tool

When it comes to tracking mileage, half the battle is keeping an accurate tab of your driving history. The built-in GPS on your device automatically tracks your mileage, recording every single trip at the touch of a button. It also manages trips as well, storing them and allowing you to view, edit and email them with complete ease.

  • Invaluable Business Tools and Features
    • Calculators
    • Tax tables
    • Logbooks
    • Expense tracking
    • Income management

As your certified public accounting firm, we’re committed to finding effective ways to communicate and interact with you in the most efficient possible way. To access information at your fingertips, the new P&R app also provides push notifications, so we can instantly share important news, deadline reminders and financial updates.

By investing in this state-of-the-art app, our goal is to prepare you with the financial information you need today so you can achieve the results you envision for the future.

Go on . . . explore and enjoy our complimentary Patrick & Raines CPAs app. You’ll find it at your favorite app store.

At Patrick & Raines CPAs, our accounting team holds decades of experience serving the business community and individuals with complex financial planning needs. Let us know how we can help: or 904-396-5400.

Beware of the IRS “Dirty Dozen” Tax Scams

Great news! After careful budget planning, you’ve determined a charitable donation is possible this year. Before deciding which charity proves worthy of your hard-earned money, beware of unscrupulous groups masquerading as “worthy” organizations.

For the past several years, fake charities made the list of IRS tax scams, referred to as the “Dirty Dozen.” These organizations exist for the sole purpose of taking money from unsuspecting contributors.

Many tax scams peak during the income tax filing season, but the most common time to encounter a for-profit scheme posing as a charity is shortly after a major disaster. Take time to research an organization thoroughly before giving, to ensure your money does more than line the pockets of scam artists.

The IRS suggests helpful tips before deciding where to make a charitable contribution:

  • Pay close attention to the name of the donation recipient. Some companies attempt to trick you by using a name similar to a well-known and respected organization.
    • Request an Employer Identification Number (EIN); and
    • Confirm their identity on the IRS’ list of legitimate charities.
  • Never provide personal information such as your Social Security number or passwords to anyone requesting a donation over the phone. Before sharing creditor banking information, confirm the legitimacy of the charity.
  • Never send cash. Writing a check or using a credit card provides you with automatic documentation of your gift in case receipts aren’t provided.
  • Scammers prey on concerns of the public. Fraudulent organizations tend to appear after a disaster purposely designed to take advantage of willing philanthropists, along with the victims themselves. They may pose as IRS agents to gather personal financial information, then steal the victims’ identities. If you’re a disaster victim call the IRS to ask about tax relief or disaster-related issues: 866-562-5227.

Be generous – but keep your wits about you! Before giving away your hard-earned money, make sure your charity of choice didn’t make the IRS list of the “Dirty Dozen.” (

If you need assistance with your complex tax return or business accounting the seasoned professionals at Patrick & Raines CPAs can help. Contact us at or 904-396-5400.

Tax Reform 101: Important Changes for 2018

As noted in our two previous blogs outlining the new income tax reform bill, the law isn’t so much simplification as it is complification. Here’s an overview of changes affecting your individual income tax returns:

  • The tax rates dropped and the brackets widened, but the law still keeps seven of them (eight if you count the zero tax bracket). The 0%/15%/20% brackets for long-term capital gains and qualified dividends also stretched, especially the 15% bracket; the 3.8% Medicare surtax threshold didn’t change.
  • Primary residence sales exclusions are generally still exempt.
  • We didn’t receive much relief for trust and estate income tax rates, which barely budged.
  • The personal exemption was replaced with an enhanced child and dependent credit plan. The child credit increases from $1,000 to $2,000, but only until the young ones turn 18; $1,400 of that amount may be refundable if you have no tax to offset.

A new $500 non-refundable credit is added for other qualifying dependents, like older kids and parents. Credits for the elderly and permanently disabled survived.

  • The standard deduction jumps from $6,350/$9,350/$12,730 (Single-MFS/HH/Joint) in 2017 to $12,000/$18,000/$24,000 in 2018, so more than half of all itemizers will no longer do so. The add-ons for blind and disabled will be $1,300 for married filers and $1,600 for all others.

Our recommended strategy to “bunch” deductions is even more practical, so that you might beat the standard deduction every other year.

  • The highly publicized maximum deduction for state and local taxes was compromised at $10,000, having a significant effect on the top 10% of some high tax state residents. In spite of all the noise, generally tax prepayments in 2017 won’t qualify for an early deduction.
  • Charitable contributions are still fully deductible, with the annual limits rising to 60% of AGI for cash and 30% for non-cash. Remember, you can bypass your annual IRA RMD income by passing it to a charity once you reach 70 ½. That’s especially valuable if you’re no longer able to itemize.
  • Casualty and theft losses are still harder to deduct – now they must be the result of a federally declared disaster. So, a typical house fire or major vandalism will no longer qualify. The 10% of AGI floor remains.
  • Another big hit for some is the elimination of most miscellaneous itemized deductions, those already subject to the 2% limit based on AGI, including expenses for business, home office, production or preservation of income, safe deposit boxes, union dues, tax preparation and advice, job searches, education and uniforms. However, Gambling losses are still allowable itemized deductions, and can now include related costs, such as travel.
  • Good news for those affected by the Pease phase out of their deductions since 2013 – it’s gone again.
  • There’s no change to the student loan interest deduction, educator’s expense deductions, education credits or deductions, or the adoption credit. However, moving expense deductions are gone and any reimbursements are taxable, except for those related to the Armed Services.
  • Alimony gets attention for decrees filed after 2018. The payment will no longer be deductible and the receipt no longer taxable.
  • Re-conversions of retirement plan Roth rollovers are not allowed after 2017. 
  • The “kiddie” tax is slightly simplified, in that it cuts the tie to the parent’s income and rates. Any material investment income will now be taxed at the trust rates mentioned above.
  • Section 529 plans now can pay for curriculum, books and materials, including online, tutoring outside the home, and educational therapy for the disabled. You can also pay up to $10,000 per student of these expenses for K-12. (Think this through, though, as your needs when your children attend college may be greater than they are now.)
  • The ACA individual mandate still lives, but the penalty drops to $0 in 2019. Since last year, the IRS was already instructed not to enforce it.
  • The annual gift exclusion rises to $15,000 in 2018 and the Estate tax exemption to $11.2 million per person. You may still want to file a return to elect “portability” between spouses. Step-up basis survived.
  • For those of us in the tax preparation business, we also received new rules. We must inquire about your qualification for the Earned Income, Child Tax and Higher Education costs.

For additional information and details on this historic tax legislation, refer to our Helpful Resources P&R Publications link.

Of course, if you need a proven tax accounting firm to assist you with individual or business tax preparation or financial planning, our team remains committed to you. We’re available to explain the law’s nuances to help you maximize this tax overhaul to your benefit. Contact us at or 904.396.5400.

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