Firm Happenings and Financial News

Oct 30

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10/30/2015 4:28 PM  RssIcon

It's National Cat Day!

Hug a cat today!

To celebrate our furry, four-legged friends, read on to learn how you can make sure your pets' best interests are considered in the event something happens and you are left unable to care for them.

Also, now is the time of year to seriously consider year-end tax planning. Tax planning can significantly affect the amount of tax liability you owe in April 2016 and/or it can give you a better idea of what your upcoming tax liability will be so that you can be better prepared. Please contact us if you would like to make an appointment for year-end planning. We're always happy to help!

Tax Year 2015: Top 10 Tax Planning Issues

As 2015 draws to a close, a turbulent economic and legislative environment means taxpayers need to keep a close eye on several major planning issues.

For example, more than 50 popular tax provisions expired at the end of 2014 and Congress has yet to extend them. Without legislative action, businesses won't get a credit for research activities or be able to immediately deduct one-half of the cost of new business equipment. Individuals would lose benefits like the ability to deduct tuition or state and local sales taxes.

"Congressional inaction on tax extenders is not only causing headaches for businesses, but individual taxpayers as well," said Mel Schwarz, partner and director of tax legislative affairs in Grant Thornton's National Tax Office in Washington, D.C.

"This climate of economic uncertainty is already making business and investment planning difficult, and Congress isn't offering much help," added Dustin Stamper, director in Grant Thornton's Washington National Tax Office.

While lawmakers did manage to enact several pieces of tax legislation this year, that's not necessarily good news - the most significant provisions are all tax increases. Congress attached several revenue raisers to a pair of trade bills and an even larger package of revenue raisers was used to finance a short-term extension of highway funding.

Read the full article for 10 of the most important 2015 tax planning considerations for individuals, executives and business owners.

Source: CPA Practice Advisor

Congressional Lawmakers are Back in Town and They've Got A Lot to Do Before Year-End

Reaching a deal on funding the government, hiking the debt ceiling, authorizing more spending on child nutrition, and bulking up the highway fund are just a few of those things with tax extenders far down the priority list.

The popular tax breaks will be revived, retroactive to January 1. They include:

  • allowing individuals who are age 70½ and older to make direct distributions of up to $100,000 tax-free from their IRAs to charity,
  • giving itemizers the option to deduct state sales taxes in lieu of income taxes, letting homeowners exclude up to $2 million of forgiven debt from income,
  • plus write-offs for private mortgage insurance and up to $250 of teachers' class supplies.

For businesses, tax breaks include:

  • the R&D credit,
  • 50% bonus depreciation,
  • the $500,000 cap on expensing business assets,
  • the 15-year depreciation write-offs for improvements that landlords make for their retail tenants.

They won't be reinstated until November or December.

The House wants some of these tax breaks made permanent, including many business-friendly ones and the IRA-to-charity break, while the Senate Finance Committee prefers just a two-year extension of the entire package. President Obama has said he would veto legislation that makes the cuts permanent without offsetting the cost to the government. At the end of the day, all of the breaks will be given another temporary lease on life for 2015, and possibly for 2016 as well.

A proposal to curb false refunds and tax identity theft has bipartisan support. The bill from the Senate's top taxwriters, Orrin Hatch (R-UT) and Ron Wyden (D-OR), would make it harder for fraudsters to steal taxpayers' identities and get tax refunds. Among its provisions:

  • having employers file W-2s and 1099-MISCs sooner with the government. The current February 28 due date would be moved up to February 15 (however, the January 31 due date for sending the employee's copy wouldn't be affected).
  • putting only the last four digits of workers' Social Security numbers on W-2s sent to employees. The full number would have to be listed on the copy the IRS gets.
  • requiring paid preparers to electronically file all individual tax returns. The e-filing mandate currently applies to those who prepare more than 10 returns.

Source: Kiplinger Tax Letter, Sept. 25, 2015

IRS Tax Tips for Starting a Business

When you start a business, one key to your success is to know your tax obligations. You may not only need to know about income tax rules, but also about payroll tax rules.

Here are five IRS tax tips that can help you get your business off to a good start.

  1. Business Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, partnership and corporation. The type of business you choose will determine which tax forms you will file.
  2. Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax your business pays depends on the type of business structure you set up. You may need to make estimated tax payments. If you do, use IRS Direct Pay to pay them. It's the fast, easy and secure way to pay from your checking or savings account.
  3. Employer Identification Number. You may need to get an EIN for federal tax purposes. Search "do you need an EIN" on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.
  4. Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.
  5. Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.

The employer shared responsibility provisions of the Affordable Care Act affect employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees). These employers' are called applicable large employers. ALEs must either offer minimum essential coverage that is "affordable" and that provides "minimum value" to their full-time employees (and their dependents), or potentially make an employer shared responsibility payment to the IRS. The vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.

Employers also have information reporting responsibilities regarding minimum essential coverage they offer or provide to their fulltime employees. Employers must send reports to employees and to the IRS on new forms the IRS created for this purpose.

Get all the tax basics of starting a business on IRS.gov at the Small Business and Self-Employed Tax Center.

Source: IRS Summertime Tax Tip 2015-15

Estate Planning: Pet Trust Primer

Those of us who think of our pets as family members are quickly learning that one of our responsibilities is to ensure that they are cared for long after we become incapable of doing so. One way to fulfill this responsibility is to set up something called a pet trust - a legally sanctioned arrangement that provides for the care and maintenance of one or more pets in the event of their owner's disability or death.

Read the full Pet Trust Primer for some basic definitions and guidelines that will help you to decide whether or not a pet trust will work for you.

Source: ASPCA

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