Harless Tax Blog
Much of the headline news about the Protecting Americans from Tax Hikes Act of 2015 understandably has focused on the many "extenders" provisions that now have been made permanent or extended beyond the usual two-year period found in prior tax bills.
However, Congress also made substantive modifications within many of those extenders that may be no less important. Many of these changes have only been in effect since Jan. 1, 2016, rather than reaching back to Jan. 1, 2015, the general start date for most of the extenders. This column takes a look at some of these modifications and how taxpayers might benefit from them. READ ENTIRE ARTICLE >
It’s that time of year again. The IRS wants to hear from you. If own a business that employs independent contractors, 1099’s must be filed on a timely basis and the deadline is approaching. A 1099 must be filed for every independent contractor that the business pays $600 or more for the calendar year to avoid penalties. The due date for mailing the recipient his copy is February 1, 2016. The due date for filing the IRS copy is February 28, 2016. Tax Preparation South Florida
- Did you know that the Affordable Care Act requires that you have minimum essential health coverage or make a shared responsibility payment, unless you’re exempt? Be sure to carefully review the variety of exemptions available to you to minimize any shared responsibility payment that you might have.
- Individuals who do not have health coverage will pay the higher of 2 percent of their yearly household income.
- The tax rate on net capital gains is a sliding scale from zero to 20 percent depending on the taxpayers’ income level. For most taxpayers, the tax rate on capital gains (and qualified dividends) is no higher than 15 percent.
- Beware of the wash sale rules: buying and selling the same, or substantially same, stock within 30 days results in disallowed losses.
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 >
Read Original Article >