by Marketing | Apr 1, 2016 | Tax Tips
Monday, April 18, is the deadline for filing certain returns and taking certain tax-related actions. Here are the major deadlines.
- Filing 2015 income tax returns for individuals. If you cannot file your return by this deadline, be sure to file an extension request by April 18. The automatic extension (you don’t need to explain to the IRS why you need more time) gives you until October 17, 2016, to file your return. An extension does not, generally, give you more time to pay taxes you still owe. To avoid penalty and interest charges, taxes must be paid by April 18.
- Filing 2015 partnership returns for calendar-year partnerships.
- Filing 2015 income tax returns for calendar-year trusts and estates.
- Filing 2015 annual gift tax returns.
- Making 2015 IRA contributions.
- Paying the first quarterly installment of 2016 individual estimated tax.
- Amending 2012 individual tax returns (unless the 2012 return had a filing extension).
- Original filing of 2012 individual income tax return to claim a refund of taxes. Some taxpayers have tax refunds due them for prior years, and unless a return is filed to claim the refund by the three-year statute of limitations, the refund is lost forever.
by Marketing | Mar 30, 2016 | Tax Tips
In 2013, the IRS issued regulations clarifying when tangible real and personal business property can be expensed. The regulations provided safe harbors that let you deduct certain costs you’d otherwise have to capitalize. For example, using a de minimis safe harbor, you could elect to deduct individual capital expenditures of $500 or less if your business did not have an “applicable financial statement.” (In general, an applicable financial statement is a financial statement based on a certified audit by an accounting firm.) Effective beginning with 2016 taxable years, this safe harbor has increased to $2,500 per invoice or item. In addition, the IRS says it will not contest similar treatment in audits of earlier years.
by Marketing | Mar 15, 2016 | Tax Tips
What supporting documentation do you need to claim charitable deductions on your federal income tax return?
In general, you can support monetary contributions of any amount with a cancelled check, credit card statement, proof of payroll deduction, or a receipt from the charity. The paperwork must show the organization’s name and the amount and date of your contribution.
When you contribute cash of $250 or more, get a written acknowledgement from the charity. The receipt must show the name of the charity, the date of your donation, and the amount donated, as well as a description and the estimated value of any nondeductible item (such as a book or dinner) provided to you.
For property donations, keep copies of support for the value you claimed. The allowable deduction for a property donation is generally limited to the lesser of cost (or other basis) or fair market value. That means you’ll need records showing what you paid for the item, as well as support for the current value. For example, you might use ads from second-hand stores or consignment shops to determine the fair market value of donated clothing and household items.
Be aware that the higher the value of a property donation, the more support you need. When you donate an item with a value under $250, ask for a receipt from the charity showing the organization’s name, the date and location of the contribution, and a description of the property. For items valued up to $500, the receipt also needs to include a statement indicating whether you were given any goods or services in exchange for your contribution. In addition, the receipt must provide a description and estimated value for those goods or services. If you donate property with a value between $500 and $5,000, your paperwork must show how and when you got the property and its cost or other basis. Items valued over $5,000 generally need a written appraisal from a qualified appraiser.
Additional requirements apply when you donate property that has appreciated in value.
by Hawkinson | Feb 5, 2015 | Tax Tips
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.
We can also help with that.
by Hawkinson | Oct 28, 2014 | Tax Tips
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.
by Hawkinson | Oct 20, 2014 | Tax Tips
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.
