Harless Tax Blog
Although there are many changes to the tax code for 2016, recently released tax savings tips by The National Society of Accountants indicates that the current individual income tax rates of 10, 15, 25, 28, 33, 35 and 39.6 percent stay in effect for 2016 and your tax rate depends on your income (i.e. the more you make, the more you pay). Additionally, the standard deduction remains the same as 2015 for all filing statuses except head of household (HOH). The HOH filer’s standard deduction has been increased to $9,300, a change of $50 over the 2015 amount. Here are some things to keep in mind regarding year-end tax savings.
- Defer (or postpone) income whenever possible and increase deductions as much as possible.
- Spread recognition of your income between years by having your employer pay you your year-end bonus in January of the following year.
- Maximizing both deductible retirement contributions and allowable retirement distributions for this calendar year.
- Harvest capital losses in order to offset capital gains.
- Postpone the redemption of U.S. Savings Bonds.
- Delay your year-end billings and collections.
- Delay corporate liquidation distributions (full cash-value payment for all a company’s stock you hold) until 2016.
- Pay your last state estimated tax installment in 2015.
- Pre-pay real estate taxes or mortgage interest.
- Make a contribution to your favorite charity from your IRA. Tax-free distributions, up to a maximum of $100,000 per taxpayer each year from IRAs to public charities, have been allowed as an alternative to reporting the income and taking an itemized deduction. You must be 70½ or older to do this.
- Retirement savings: You can contribute up to $5,500 to an individual retirement account 2015 and, if you’re 50 or older, $1,000 more in catch-up contributions. You also have until April 15, 2016, to make an IRA contribution for 2015.
- Delay until 2016 converting your traditional IRA to a Roth IRA, which incurs taxes.
This letter is to inform you of recent important tax law changes that impacts all partnership income tax returns (Form 1065). Effective for partnerships with a year-end date for December 31, 2015 or later, the due date for the tax return has been changed to March 15th instead of April 15th.
Previously, an automatic extension of time to file the Form 1065 was 5 months (extending the filing date from April 15th to September 15th). This change in the tax law grants an automatic extension of time to file of 6 months. THE EXTENDED DUE DATE IS STILL SEPTEMBER 15TH.
As always, we are available to answer any questions concerning the change of due date or other tax matter, please do not hesitate to contact us either by phone or email.
Original Article from CNBC Jennifer Woods, special to CNBC.com
Tuesday, 17 Nov 2015 | 7:00 AM ET
Death and taxes may be two of life's major certainties, but just as healthy living can help extend your life, savvy tax moves can help boost your tax savings – as long as you make them before Dec. 31.
There are no significant tax changes looming as 2015 winds down, which is good news. However, that's no reason to slack on your year-end tax planning.
There are myriad strategies that can be used to lessen your tax bite, from more basic maneuvers to shave a few bucks off your tax bill to more sophisticated estate-planning tactics, which for some could amount to millions in savings.
"There are various things to look at from deferring income to accelerating deductions to managing net investment income tax," said Jordan Niefeld, a CPA and certified financial planner with Raymond James & Associates.
"Working with someone who knows what they're doing really helps," because they can tailor a strategy that fits with your overall financial plan, he said. Using someone in your state is also particularly important, as state tax laws can vary considerably. Read Original Article >
Important information for Partnerships, C corporations, Form 5500 filers and some tax-exempt
A recently-passed and signed bill means tax filing dates will shift for taxable years beginning with 2016. Titled H.R. 3236 Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, but better known as the Highway Funding Bill, this new law alters filing deadlines for partnerships, C corporations, Form 5500 filers and some tax-exempt. You’ll need to note the new dates in 2017 when you file for the 2016 tax year.
In essence, the changes are intended to allow more time to gather and receive necessary filing information before filing deadlines. In fact, the American Institute of Certified Public Accountants favored the bill’s tax provisions. However, a few return type dates will not be affected by the change and Form 1065 was moved a month earlier. C Corporations, Employee Benefit Plans, Trust and Estate and Exempt Organizations earn extra time for preparation of either original returns, extended returns or both.
And in case you are wondering, individual tax return filing dates remain the same.
Aside from alimony, child support, and a name change most people do not consider the tax consequences of getting a divorce or a separation from their spouse. Although, such a major life change can have a big impact on your tax situation. Here are a few things to be aware of:
- Child support paymentsare neither deductible for the payee nor included in the income of the recipient.
- Alimony payments are deductible from the payee’sgross income includable as incomeon the recipient’s tax return. In order to avoid owing additional taxes at year end, the recipients of alimony should either make estimated tax payments or have additional taxes withheld from their paycheck. There are two conditions that must be satisfied in order for the payments to be deductible/includable.
- Payments must be made under a divorce decree or separation agreement.
- Only the amount specified as alimony in the agreement or decree is deductible or includable. Wording in an agreement that states “$XX amount for alimony and child support will be paid monthly” will not be deductible. The amount stipulated as alimony must be easily identifiable. Spouses that include additional money with the alimony payment CANNOTbe deductible nor is the extra amount included as taxable income.
- Contributions to a spouse’s traditional IRA are not deductible if a final decree or separation agreement is reached before year end. Contributions made to your own traditional IRA may be deductible.
- Name Changes can confuse a computer and really foul up a return. If you change your name as part of your divorce or separation, notify the Social Security Administration using Form SS-5 which can be downloaded from SSA.gov or by calling 1-800-772-1213.
- Health Care Law Considerations
- Loss of health insurance because of a divorce or separation does not relieve you of the requirement to have health insurance. Certain qualifying life events (loss of healthcare coverage because of divorce or separation meets the test) allow you to enroll for coverage through the Health Insurance Marketplace during a special enrollment period.
- If you are receiving advance payments of your health care premium tax credit for 2015 because you purchased your health insurance from the Marketplace, you should report your change of circumstances to the Marketplace. Changes to report include changes to your name, marital status, income or family size and reporting these changes can help you make sure you are getting the correct amount of premium tax credit.
- If you and your former spouse share the same health care coverage plan purchased through the Marketplace and are divorced or separated (by legal agreement) you must allocate the policy amounts on your separate tax returns to correctly calculate your premium tax credit and advance premium payments made on your behalf.
For more info see our Tax Planning South Florida page
Original Article by Ken Winkler of http://www.bfvlaw.com >
On June 30, 2015, the U.S. Department of Labor (“DOL”) Wage and Hour Division issued proposed regulations which, if adopted, could significantly increase the number of individuals who are eligible for overtime pay. The DOL’s proposed changes are in response to President Obama’s March 2014 Presidential Memorandum directing the DOL to simplify the overtime regulations and make overtime available to more employees. The DOL estimates that 4.6 million workers who are now classified as exempt under the current regulations will become overtime-eligible under the proposed regulations without some intervening action by their employers. Visit Harless' Tax Planning Page >
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It can be hard to understand taxes. It can be much harder if English is not your first language. The IRS provides many free products and services in Spanish on IRS.gov/espanol. Here are some tips on tax help “en Español” that you can get from the IRS this summer:
- Get answers 24/7: You can access IRS.gov/espanol at any time. It offers tax help to both individuals and businesses. You can even get help in Spanish for some specific types of work. This includes tax centers for agricultural workers and truckers . If you’re facing financial difficulty, visit “Centro Tributario para Asistir a Contribuyentes Desempleados .”
- Use IRS e-file: If you still need to file your 2014 taxes, you should e-file your tax return. IRS e-file is safe, easy and the most accurate way to file. It is available until Oct. 15. Visit IRS.gov and enter “Presentación Electrónica ” in the search box to learn more.
- Other things your can do at www.irs.gov/espanol
- Get tax forms and publications.
- Check out IRS2Go. The free IRS app is available in English and Spanish. Use it with an iPhone, iPad or Android mobile device. With IRS2Go you can:
- Get your refund status.
- Watch IRS YouTube videos.
- Watch the latest pod casts
- Get tax news updates.
- Follow the IRS.
- Get health care tax information. The IRS website also has information about the Affordable Care Act tax provisions in both English and Spanish to educate individuals and businesses on how the health care law may affect them.
- Use IRS online tools.
- Check the status of your refund.
- Find out if you’re eligible for the Earned Income Tax Credit.
- Get the latest on new tax laws.
- Connect with the IRS on Twitter.
- Get tips at the Multimedia Center.
Source: IRS Newsletter, Issue Number: IRS Summertime Tax Tip 2015-07
WASHINGTON —The Internal Revenue Service on July 14, 2015 encouraged eligible small businesses that did not file certain retirement plan returns to take advantage of a low-cost penalty relief program enabling them to quickly come back into compliance.
The program is designed to help small businesses that may have been unaware of the reporting requirements that apply to their retirement plans.
Small businesses that fail to file required annual retirement plan returns, usually Form 5500-EZ, can face stiff penalties – up to $15,000 per return. However, by filing late returns under this program, eligible filers can avoid these penalties by paying only $500 for each return submitted, up to a maximum of $1,500 per plan. For that reason, program applicants are encouraged to include multiple late returns in a single submission. Find the details on how to participate in Revenue Procedure 2015-32 by calling our office or by visiting the IRS website at www.irs.gov.
The program is generally open to small businesses with plans covering a 100 percent owner or the partners in a business partnership, and the owner’s or partner’s spouse (but no other participants), and certain foreign plans. Those who have already been assessed a penalty for late filings are not eligible.
The Department of Labor offers a similar relief program for businesses with retirement plans that include employees known as the Delinquent Filer Voluntary Compliance Program.
Started as a one-year pilot, the IRS program was made permanent in May 2015. The IRS has received about 12,000 late returns since the pilot program began in June 2014.
The IRS reminds retirement plan sponsors and administrators that in most cases, a return must be filed each year for the plan by the end of the seventh month following the close of the plan year. For plans that operate on a calendar-year basis, as most do, this means the 2014 return is due on July 31, 2015. For details, visit the Form 5500 Corner on IRS.gov.
If you are in the U. S. Armed Forces, special tax breaks may apply to you. For example, some types of pay are not taxable. Certain rules apply to deductions or credits that you may be able to claim that can lower your tax. In some cases, you may get more time to file your tax return. You may also get more time to pay your income tax. Here are the top 10 IRS tax tips about these rules:
- Deadline Extensions. Some members of the military, such as those who serve in a combat zone, can postpone some tax deadlines. If this applies to you, you can get automatic extensions of time to file your tax return and to pay your taxes.
- Combat Pay Exclusion. If you serve in a combat zone, certain combat pay you get is not taxable. You won’t need to show the pay on your tax return because combat pay is not part of the wages reported on your Form W-2, Wage and Tax Statement. If you serve in support of a combat zone, you may qualify for this exclusion.
- Earned Income Tax Credit or EITC. If you get nontaxable combat pay, you can include it to figure your EITC. Doing so may boost your credit. Even if you do, the combat pay stays nontaxable.
- Moving Expense Deduction. You may be able to deduct some of your unreimbursed moving costs. This applies if the move is due to a permanent change of station.
- Uniform Deduction. You can deduct the costs of certain uniforms that you can’t wear while off duty. This includes the costs of purchase and upkeep. You must reduce your deduction by any allowance you get for these costs.
- Signing Joint Returns. Both spouses normally must sign a joint income tax return. If your spouse is absent due to certain military duty or conditions, you may be able to sign for your spouse. In other cases when your spouse is absent, you may need a power of attorney to file a joint return.
- Reservists’ Travel Deduction. If you’re a member of the U.S. Armed Forces Reserves, you may deduct certain costs of travel on your tax return. This applies to the unreimbursed costs of travel to perform your reserve duties that are more than 100 miles away from home.
ROTC Allowances. Some amounts paid to ROTC students in advanced training are not taxable. This applies to allowances for education and subsistence. Active duty ROTC pay is taxable. For instance, pay for summer advanced camp is taxable.
- Civilian Life. If you leave the military and look for work, you may be able to deduct some job search expenses. You may be able to include the costs of travel, preparing a resume and job placement agency fees. Moving expenses may also qualify for a tax deduction.
- Tax Help. Most military bases offer free tax preparation and filing assistance during the tax filing season. Some also offer free tax help after April 15.
Source: IRS Publication 3.
Original Article: www.washingtonpost.com. 5/26/15. "Hackers Stole Personal Information from 104,000 Taxpayers IRS says". Lisa Rein and Jonelle Marte
On Tuesday, May 26, 2015, IRS Commissioner John Koskinen announced a security breach of IRS computers and that nearly 104,000 taxpayers have become victims of a new, sophisticated identity theft scheme involving the IRS’s online "Get Transcript" application. The breach was discovered earlier in May while IRS was investigating a suspected denial-of-service attack on the application. Their investigation revealed that a large number of suspicious domains had been used to access an unexpectedly high volume of tax transcripts. It was ultimately determined by the IRS that organized criminals had been successful in accessing the transcripts of an estimated 104,000 out of approximately 200,000 attempts. Consequently, the IRS has disabled the online application and is taking aggressive steps to warn the affected taxpayers.
"We have detected and determined that there was unauthorized access to our Get Transcript application that ran from February to May," Koskinen told reporters. "To try to get through to get that transcription, the criminals had to already have stolen Social Security numbers, names, addresses and other personal identifiers available. Then they had to have enough personal information for each taxpayer to get through the so-called personal related questions―the so-called auto-wallet questions."
The 104,000 downloads represents only a small fraction of the 23 million successful downloads through the Get Transcript application that occurred during the 2015 filing season. Furthermore, Mr. Koskinen estimated that the 104,000 downloads would result in about 15,000 false tax return filings and that no money had been paid out in fraudulent refunds. According to Mr. Koskinen, IRS would release the actual figures as soon as it discovers them. Additionally, Mr. Koskinen stressed that the data breach had affected the Get Transcript application only and that the basic tax filing system used by 150-million taxpayers was unaffected.
Informing the 200,000 taxpayers whose transcripts were downloaded (or nearly downloaded) and that identity theft criminals have uncovered a large volume of their personal information is a top priority at the moment. The highly sensitive information obtained would include Social Security numbers, names, current and past addresses, car ownership histories, high school mascots, places of marriage and other information commonly used to authenticate identity. In addition to sending letters to these taxpayers, the IRS will provide free credit monitoring services to the 104,000 taxpayers whose accounts were actually accessed, Koskinen promised. "We greatly regret that this additional information is available to criminals," he said.