FSE 69 Clincher PIC 1
FSE 69 Clincher PIC 2
FSE 55 Clincher PIC 1
FSE 69 Clincher PIC 2
Zipp 202 Clincher PIC 1 – After years of use front side
Zipp 202 Clincher PIC 2 – After years of use back side
IRS Reminds Taxpayers of April 1 Deadline to Take Required Retirement Plan Distributions
WASHINGTON — The Internal Revenue Service today reminded taxpayers who turned age 70½ during 2016 that, in most cases, they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Saturday, April 1, 2017.
The April 1 deadline applies to owners of traditional (including SEP and SIMPLE) IRAs but not Roth IRAs. It also typically applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.
The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. A taxpayer who turned 70½ in 2016 (born after June 30, 1945 and before July 1, 1946) and receives the first required distribution (for 2016) on April 1, 2017, for example, must still receive the second RMD by Dec. 31, 2017.
Affected taxpayers who turned 70½ during 2016 must figure the RMD for the first year using the life expectancy as of their birthday in 2016 and their account balance on Dec. 31, 2015. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.
Most taxpayers use Table III (Uniform Lifetime) to figure their RMD. For a taxpayer who reached age 70½ in 2016 and turned 71 before the end of the year, for example, the first required distribution would be based on a distribution period of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary. Both tables can be found in the appendices to Publication 590-B.
Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Employees who are still working usually can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. See Tax on Excess Accumulation in Publication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.
The IRS encourages taxpayers to begin planning now for any distributions required during 2017. An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount in Box 12b on Form 5498. For a 2017 RMD, this amount would be on the 2016 Form 5498 that is normally issued in January 2017.
IRA owners can use a qualified charitable distribution (QCD) paid directly from an IRA to an eligible charity to meet part or all of their RMD obligation. Available only to IRA owners age 70½ or older, the maximum annual exclusion for QCDs is $100,000. For details, see the QCD discussion in Publication 590-B.
A 50 percent tax normally applies to any required amounts not received by the April 1 deadline. Report this tax on Form 5329 Part IX. For details, see the instructions for Part IX of this form.
Tax Time Guide: Still Time to Contribute to an IRA for 2016
WASHINGTON — The Internal Revenue Service today reminded taxpayers that they still have time to contribute to an IRA for 2016 and, in many cases, qualify for a deduction or even a tax credit.
This is the eighth in a series of 10 IRS tips called the Tax Time Guide. These tips are designed to help taxpayers navigate common tax issues as this year’s tax deadline approaches.
Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and the self-employed to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.
Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for a 2016 tax return, contributions must be made by April 18, 2017. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they complete their 2016 tax returns.
Generally, eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2016, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at least age 70½ at the end of 2016 is barred from making contributions to a traditional IRA for 2016 and subsequent years.
The deduction for contributions to a traditional IRA is generally phased out for taxpayers covered by a workplace retirement plan whose incomes are above certain levels. For someone covered by a workplace plan during any part of 2016, the deduction is phased out if the taxpayer’s modified adjusted gross income (MAGI) for that year is between $61,000 and $71,000 for singles and heads of household and between $0 and $10,000 for those who are married filing separately. For married couples filing a joint return where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range for the deduction is $98,000 to $118,000. Where the IRA contributor is not covered by a workplace retirement plan but is married to someone who is covered, the MAGI phase-out range is $184,000 to $194,000.
Even though contributions to Roth IRAs are not tax deductible, the maximum permitted amount of these contributions is phased out for taxpayers whose incomes are above certain levels. The MAGI phase-out range is $184,000 to $194,000 for married couples filing a joint return, $117,000 to $132,000 for singles and heads of household and $0 to $10,000 for married persons filing separately. For detailed information on contributing to either Roth or Traditional IRAs, including worksheets for determining contribution and deduction amounts, see Publication 590-A, available on IRS.gov.
Taxpayers whose employer does not offer a retirement plan may want to consider enrolling in myRA®, a retirement savings plan offered by the U.S. Department of the Treasury. It’s safe, affordable and a great option for people who don’t have a retirement savings plan at work. Taxpayers can direct deposit their entire refund or a portion of it into an existing myRA – Retirement Account. For further details and to open a myRA account online, visit www.myRA.gov.
Also known as the Retirement Savings Contributions Credit, the Saver’s Credit is often available to IRA contributors whose adjusted gross income falls below certain levels. For 2016, the income limit is $30,750 for singles and married filing separate, $46,125 for heads of household and $61,500 for married couples filing jointly.
Eligible taxpayers get the credit even if they qualify for other retirement-related tax benefits. Like other tax credits, the Saver’s Credit can increase a taxpayer’s refund or reduce the taxes they owe. The amount of the credit is based on a number of factors, including the amount contributed to either a Roth or Traditional IRA and other qualifying retirement programs. Form 8880 is used to claim the Saver’s Credit, and its instructions have details on figuring the credit correctly.
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Issue Number: IR-2017-59
Inside This Issue
Tax Time Guide: Electronic Payment/Payment Agreement Options Available to Those Who Owe Taxes
WASHINGTON — The Internal Revenue Service today reminded taxpayers that it’s easier than ever to pay taxes electronically. For those unable to pay on time, several quick and easy solutions are available.
This is the seventh in a series of 10 IRS tips called the Tax Time Guide. Taxpayers can use these tips to find solutions to common tax issues as the April 18 tax deadline approaches.
Taxpayers who owe taxes can now choose among several quick and easy electronic payment options, including the following:
Taxpayers can electronically request an extension of time to file. An extension of time to file is not an extension to pay. Taxes are still due by the original due date. Taxpayers can get an automatic extension when making a payment with Direct Pay, Electronic Federal Tax Payment System or by debit or credit card. Select “Form 4868” as the payment type to receive the automatic extension.
Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” To help ensure that the payment gets credited promptly, also enclose a Form 1040-V payment voucher. Also, print on the front of the check or money order: “2016 Form 1040”; name; address; daytime phone number; and Social Security number.
Taxpayers can view their federal tax account balances online. It’s safe, secure and available on the “Finding out How Much You Owe” page on IRS.gov. They can also access payment options or apply for an installment agreement on this page.
The IRS advises taxpayers to file either an income tax return or a request for a tax-filing extension by this year’s April 18 deadline to avoid late-filing penalties. This penalty can be ten times as costly as the penalty for paying late.
Taxpayers who owe, but can’t pay the balance in full, do have options. Often they qualify for one of several relief programs, including:
Other tips in the Tax Time Guide series are available on IRS.gov.
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IRS Seeks Volunteers for Taxpayer Advocacy Panel through April 24
WASHINGTON — The Internal Revenue Service is seeking civic-minded volunteers to serve on the Taxpayer Advocacy Panel (TAP), a federal advisory committee that listens to taxpayers, identifies major taxpayer concerns and makes recommendations for improving IRS service and customer satisfaction.
The TAP reports annually to the Secretary of the Treasury, the Commissioner of the Internal Revenue Service and the National Taxpayer Advocate. The Office of the Taxpayer Advocate is an independent organization within the IRS that provides support for and oversight over the TAP.
“In trying to comply with an increasingly complex tax system, taxpayers may find they need different services than the IRS is currently providing,” said Nina E. Olson, National Taxpayer Advocate. “The TAP is vital because it provides the IRS with the taxpayers’ perspective and suggestions for improvement. This helps the IRS deliver better service to assist taxpayers in meeting their tax obligations.”
The TAP includes members from all 50 states, the District of Columbia and Puerto Rico, plus one member abroad. This member represents U.S. taxpayers living overseas. Each member is appointed to represent the interests of taxpayers in his or her geographic location as well as taxpayers as a whole.
To be a member of the TAP, a person must be a U.S. citizen, not be a current employee of any bureau of the Treasury Department or have worked for any bureau of the Treasury Department within three years preceding Dec. 1 of the current year, be current with his/her federal tax filing and payment obligations, be able to commit 200 to 300 volunteer hours during the year and pass a Federal Bureau of Investigation criminal background check. Individuals who practice before the IRS must be in good standing with the IRS. New TAP members will serve a three-year term starting in December 2017. Applicants chosen as alternate members will be considered to fill any vacancies that open in their areas during the next three years.
The TAP is seeking members in the following locations: Alaska, Arizona, California, Delaware, District of Columbia, Georgia, Idaho, Indiana, Kansas, Louisiana, Massachusetts, Maryland, New Jersey, Nevada, North Dakota, Ohio, Oregon, Pennsylvania, Utah, Virginia, Vermont and Washington.
The TAP is also seeking to include at least one additional member to represent international taxpayers. For these purposes, “international taxpayers” are defined broadly to include U.S. citizens working, living or doing business abroad or in a U.S. territory.
The TAP is also seeking alternate members for all states, the District of Columbia and Puerto Rico. Alternate members are particularly needed in Colorado, Iowa, Indiana, Michigan, Missouri, Mississippi and Nebraska.
Federal advisory committees are required to select members who represent a balance of perspectives. As such, individuals from under-represented groups, such as Native Americans and non-tax professionals, are encouraged to apply. However, all timely applications will be considered.
Applications for the TAP will be accepted through April 24, 2017. Interested individuals must apply online at www.usajobs.gov. For additional information about the TAP or the application process, visit www.improveirs.org and select the “Join TAP” tab or call 888-912-1227 and select option five. Those interested can also contact the TAP staff at email@example.com. Callers outside the U.S. and U.S. territories should call 214-413-6523 (not a toll-free call).