If you have a business or rental property, you might have to prepare 1099s to send to anyone you paid at least $600 for services in 2014. You should have sent these 1099 forms by January 31. You will then need to file a copy of the forms with the IRS by February 28. You generally do not have to send 1099s to corporations.
This requirement has been around for a while but the reason this is more critical than in the past is that there are questions on tax forms now specifically asking whether any payments you made require you to prepare these 1099s and, if so, whether you have or will file the required forms.
When you are ready to file your 2014 tax return and are faced with these questions you will be faced with the following if you have not filed the forms:
Truthfully answer the questions that you do not have to file the forms or that you have properly filed them;
Falsely answer the questions that you don’t have to file them;
Leave the forms blank.
In the case of alternative 2, you will be perjuring yourself which is NEVER a good idea and, is in fact, illegal.
In the case of alternative 3, you will be inviting the IRS to audit your return to see if you are in compliance. This is also NOT a good idea.
If you have not filed the required 1099s, you still can do so even though they are now late since they should have been sent already.
If you have any questions or if we can be of assistance, please call us.
NOW THAT YOU ARE THINKING ABOUT THE 1099 FILING REQUIREMENT, THIS WOULD BE A GOOD TIME TO GIVE SOME THOUGHT TO HOW TO ACCUMULATE SUCH INFORMATION FOR 2015 SO THAT YOU WILL BE ABLE TO FILE ON TIME. Since you might not know whether you will exceed the $600 filing requirement threshold until the end of the year, it would be best to put in place a system to track this information now through the end of the year.
The Social Security Administration announced that the wage base for figuring the Social Security tax will rise from $117,000 in 2014 to $118,500 in 2015. The tax rate itself will remain unchanged at 6.2% resulting in a tax increase of $93 each for both the employee and the employer when wages reach $118,500 or more in 2015.
In addition to the Social Security Tax there is the Medicare tax which will not change. This is 1.45% for both the employee and the employer.Certain taxpayers may also encounter the 0.9% additional Medicare tax – this is dependent on the employee’s filing status and total earned income.
Note that those taxpayers that are self-employed pay both the employee and the employer components of these taxes.
A reminder to employers: As of January 1 of this year, you may no longer reimburse employees for their individual health insurance policies or pay the premiums directly to the insurance company on a pre-tax basis. Employers that continue to pay employee’s premiums or reimburse their payment must include these amounts in the employee’s taxable wages or be subject to substantial penalties. Only if the employer offers a group plan can pre-tax dollars be used for health insurance premiums.
With schools back in session, the IRS has issued a reminder to taxpayers not to overlook available tax credits for education expenses. Tax credits are applied directly against the income tax you owe. There are two available credits: the American Opportunity Tax Credit and the Lifetime Learning Credit. The American Opportunity Tax Credit can be up to $2,500 annually for an eligible student and is 40% refundable. That means you could get money back when the credit exceeds your tax bill. The maximum Lifetime Learning Credit is $2,000 and is not refundable. You can claim only one type of education credit per student each year.
If you requested a six-month extension to file your 2013 individual income tax return, you face a major deadline on October 15. That’s the final date for filing your 2013 return; the IRS does not give additional extensions except for in very limited cases.
It is important to understand that you should file your tax returns on time even if you can’t pay your tax in full. The IRS charges a late filing penalty of 5% of the balance due per month up to a maximum of 25%.On top of this, they also charge late payment penalties along with interest compounded daily.Each state also has its own schedule of penalties and interest.
Please contact Hawkinson, Muchnick & Associates if you need filing assistance.
What do you expect to do in retirement? A recent survey conducted by US News and World Report shared some of those findings and we thought you might be interested. The final word is this: You can only be confident about what you want out of retirement if you’d planned well and accordingly. It is never too late to start that process and we are here to help.
Many plan on working longer: According to the survey, almost 48% of respondents planned on working well past the age of 64 before they consider retiring. Another 17% said that they really had no plans to retire given their current financial situation. The reality, however, is that studies indicate that only 19% of current retirees have been able to work beyond 64 due to health, job layoffs and other factors.
Many plan on working in retirement: A whopping 85% of the respondents said they intended to work during retirement, whether volunteer or paid. Of those, 17% said that they would need work anyway. The rest were looking for volunteer or paid employment even thought they didn’t think they would need the money. But, what’s really happening? Upwards of 86% of those who are retired don’t receive any income from employment…see the previous paragraph about health and lack of employment opportunity.
Live long and prosper: Many respondents think they know how long their nest-eggs will last. The reality, however, is that thanks to better medical care, we are living longer! That means that whatever retirement you have in mind may very well need to extend far beyond what you thought.
What about your retirement plans? Are they based in reality? Those plans start with great financial advice and support during your peak earning years. If you have questions or are interested in a consultation, give us a call.
Paul A. Hawkinson, CPA, and Dan Muchnick, CPA, CFP Merge Practices
Paul A. Hawkinson, CPA, and Dan Muchnick, CPA, CFP — two of West Georgia’s most trusted financial professionals — announced they have merged their practices to form Hawkinson, Muchnick & Associates, PC. The merger will combine two industry leaders with over 50 years of combined experience and over 35 years of serving Douglas County. Kathy Barnes, CPA who has served numerous clients with Muchnick over the years will be part of a full-time staff of professionals ready to meet the needs of business and individual clients of all sizes.
The combined company will eventually be headquartered at 4935 Stewart Mill Road in Douglasville.
“We have long had great respect for each other’s dedication to clients and community, and we’re excited to now come together as one firm, combining our talented professionals and our distinct and complementary skill sets,” said Hawkinson, who has owned Paul A. Hawkinson, CPA, PC since 2005 and previously worked with such prestigious firms as KPMG.
“The merger will benefit current and future clients because we will share our resources, talent and best practices. This expands our ability to handle projects large or small” added Muchnick, who was previously with Cherry, Bekaert & Holland, L.L.P, and Price Waterhouse & Co.
Both Muchnick’s and Hawkinson’s staff will remain with the new firm, ensuring clients a completely transparent transition and familiar faces. Hawkinson and Muchnick, along with their strong staff of professionals, have enjoyed robust individual practices, industry leadership, and focus on personalized service and commitment to giving back in our local community. They are ideal complements to one-another.
If you or a colleague has been looking for certified public accountants who provide a strong set of accounting solutions and big-firm experience with small-town personalization, Hawkinson, Muchnick & Associates, PC deserves a close look.
About Paul A. Hawkinson Paul graduated from Georgia State University with a BBA and an MBA in Accounting and identified his love of numbers while still in high school when he began working in the accounting profession with the Kroger Company in Douglasville, GA. Paul started his professional career with KPMG in Atlanta and worked for other notable firms such as Miller, Ray, Healey and Houser in Buckhead and Moore & Cubbedge, LLP in Marietta before setting out to build his own practice in 2005.
Paul has extensive experience in all areas of accounting, planning and taxation, but particularly enjoys working with individuals and those small and medium-sized businesses that are looking for a more personal touch. His past experiences have proven to be important to clients of all sizes in the metro area and are a good match for both current and future clients of Hawkinson Muchnick & Associates.
Paul lives in Douglasville with his wife, Gina and their three sons. He attends church at Douglasville First United Methodist and serves on the boards of the Douglas County Chamber, Harvester Christian Academy, WellStar Douglas Regional Board, and the Douglas County Rotary Club.
—————————————————– About Daniel W. Muchnick Dan graduated from Indiana University with a BS in Accounting and accepted an offer in Atlanta from Price Waterhouse. After working a few years with another Atlanta firm, he started his own firm with a partner in Douglasville in 1981. After running his own firm for 14 years, he merged with Pyke & Pierce and then merged again with the regional firm of Cherry, Bekaert & Holland in 2000.
His experience with CB&H, a premiere tax, audit and consulting firm included business consulting with individuals and closely held, owner managed business’ as well as extensive experience with estate and retirement planning. Dan’s ability to serve such planning clients is enhanced by his training and certification as a Certified Financial Planner.
This wide experience means a wealth of knowledge is available to small businesses and larger businesses alike, including those in industry-specific areas like the medical and legal field, where he has served numerous clients.
Dan lives in Douglasville with his wife, Juli and has three grown sons. He has been actively involved in the local community as a member of the Kiwanis Club and the Douglas County Chamber, where he has served as president and chairman of the board. He is a member of the Douglasville First Baptist Church and currently serves as Chairman of the Deacons.
Paul A. Hawkinson, CPA, PC, is excited to announce the launch of our new Web presence. The user-friendly site has a simple, yet dynamic navigation that offers users more information about our services for the Douglasville community.
