Accounting & Tax News

 

Publication 17
Tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions and using IRAs to save for retirement


Jan. 29, 2015 - Tax Season News

The IRS is now accepting all tax returns via their e-file program.  The biggest single change that is required this tax year for an individual taxpayer has to do with ACA compliance –   ACA compliance .  As a reminder, with the start of the new calendar year it’s a very good time to update your income tax withholding from wages with your employer, which can be done by completing a Form W-4 .   The IRS offers a useful “withholding calculator ” tool, for your use in determining how much withholding to have taken out of your wages or retirement benefits. Also, please note the following IRS allowable mileage rates for the 2015 calendar year; business rate of 57 1/2 cents per mile, charitable rate of 14 cents per mile, and the medical and moving rate of 23 cents per mile.  Finally, please bear with us as we update our firm’s website for tax and payroll related resources and links , and certainly contact us, if we can answer your questions, or if you’d like to schedule an income tax appointment with our firm. Reposted from the wittenbergcpa.com blog.

Feb. 2 - Deadline For Businesses To File Annual Tax Returns

 With the deadline for annual tax filings just around the corner, the Washington State Department of Revenue (Revenue) is offering some tips to help businesses file their taxes on time.
January is the busiest time of year for Revenue, with tax returns all due from monthly, quarterly and annual filers. In all, Revenue could receive up to 518,000 returns this month – about half of those are expected to be from annual filers.
Every annual filer – even if they had no business activity in 2014 – must file a tax return with Revenue by Feb. 2, 2015. The typical due date to file annual tax returns is Jan. 31, but because that date falls on a weekend this year, it has been extended to the next business day.
Around 90 percent of businesses that file monthly or quarterly use Revenue’s electronic filing system. However, some businesses are only required to file a tax return annually and may need assistance whether they file electronically, by phone or by mail.
Revenue offers several options to help taxpayers file their returns:

  • Visit one of Revenue’s offices located across the state.
  • Call and talk to Revenue’s tax specialists: 800-647-7706.
  • For answers to quick filing questions, try Live Chat to talk with a tax information specialist.

Callers can reach Revenue tax specialists between 8 a.m. and 5 p.m. every weekday. Automated phone services are available 24 hours a day.More tips for annual filers are on Revenue’s website.

Top Five Reasons To E-file

Are you still using the old school method of doing your taxes? Do you still mail paper forms to the IRS? If so, make this the year you switch to a much faster and safer way of filing your taxes. Join the nearly 126 million taxpayers who used IRS e-file to file their taxes last year. Here are the top five reasons why you should file electronically too:

1. Accurate and easy.  IRS e-file is the best way to file an accurate tax return. The tax software that you use to e-file helps avoid mistakes by doing the math for you. It guides you every step of the way as you do your taxes. IRS e-file can also help with the new health care law tax provisions. The bottom line is that e-file is much easier than doing your taxes by hand and mailing paper tax forms. 

2. Convenient options.  You can buy commercial tax software to e-file or ask your tax preparer to e-file your tax return. You can also e-file through IRS Free File, the free tax preparation and e-file program available only on IRS.gov. You may qualify to have your taxes filed through the IRS Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs. In general, VITA offers free tax preparation and e-file if you earned $53,000 or less. TCE offers help primarily to people who are age 60 or older.

3. Safe and secure.  IRS e-file meets strict security guidelines. It uses secure encryption technology to protect your tax return. The IRS has safely and securely processed more than 1.3 billion e-filed tax returns from individuals since the program began.

4. Faster refunds.  In most cases you get your refund faster when you e-file. That’s because there is nothing to mail and your return is virtually free of mistakes. The fastest way to get your refund is to combine e-file with direct deposit into your bank account. The IRS issues most refunds in less than 21 days.

5. Payment flexibility.  If you owe taxes, you can e-file early and set up an automatic payment on any day until the April 15 due date. You can pay electronically from your bank account. You can also pay by check, money order, debit or credit card. Visit IRS.gov/payments for more information.

 

 

2014 Year End Considerations for Your Business

With the end of the calendar year approaching, we would like to remind you of some of the year end procedures that your company should consider. While not all of these issues are directly relevant for your company, they should be reviewed in order to determine their usefulness to your company’s needs.

1. 1099 Requirements – The first issue to consider is whether or not your company is required to prepare 1099 Forms for vendors and service providers that you have paid in 2014. Please refer to the general requirements for Form 1099/1096 reporting, to determine the circumstances under which your company would need to file these reports. We also want to provide you with access to the IRS website, where you can access the 2014 Form 1099, and instructions, as well as the related W-9 form.

2. Annual Company Meeting – If your company is incorporated (either C or S corporation) the officers and shareholders are required to hold at least one annual meeting in order to determine matters that are essential to the management and operations of the company. Please refer to your company’s articles of incorporation and bylaws, or consult with your company’s attorney to determine the annual meeting requirements for your company. Limited Liability Companies (LLC’s) are not required to hold annual meetings, however this practice is recommended to clarify company policies, and make changes in operational matters. In order to provide you with some guidance with respect to relevant issue, please look at some example topics to be considered for your company’s annual meeting.

3. Record Retention – The minimum required period for retaining financial records is 3 years, which is the standard statute of limitations look back period, which the IRS and other tax authorities enforce. However, our office recommends a 7 year archiving of relevant tax and accounting supporting information, in order to make certain that any prior year issue can be resolved, with the proper factual financial and employment data.  Please refer to our website for more specific record retention guidelines.

4. Re-seller’s Permit – Effective January 1, 2010, the resale certificate was replaced with a re-seller’s permit, issued by the Department of Revenue. The re-seller permit can be applied for with the Department of Revenue, in order to allow your business to make wholesale purchases, including qualified contractors. The permits allow businesses to purchase items or services for resale, without paying retail sales taxes. However if your purchases are subject to sales taxes, typically for items used by your company, but were not paid at source, remember that you are required to pay use taxes, at the time you file your combined excise tax report with the State of WA’s Department of Revenue.

5. Retirement Benefits – If you haven’t already, remember to consider establishing an employee benefit type of plan, in which the employees, as well as the owners/officers of the company can all receive benefits. You may want to consider establishing a retirement type of plan, such as a SIMPLE IRA plan, which allows employees to defer a portion of their wages, along with a relatively modest company match, as a means to deferring taxable income of the employee as well as allowing a deductible, non-payroll taxable form of compensating your employees. Please refer to our Summary of Retirement Plan Options.

6. Health Savings Plan – Another consideration is to set up a health saving account (HSA) plan, which when combined with a lower premium cost “high deductible” type of medical insurance plan, allows the employees of the company, as well as the company, at the discretion of the ownership, to contribute toward a medical savings account, which can be either used by the employee during the year of contribution, or else carried over indefinitely for future medical costs, and/or eventually as a retirement type of fund, similar to an Individual Retirement Account (IRA).

7. Medical Insurance Premiums – If your business is an S corporation, remember that the medical insurance premiums paid out on behalf of the shareholders must be reported along with wages on Form W-2. The premiums can still be paid out by the S corporation on behalf of the shareholders, however the total premiums must be included as part of the shareholder’s wages, tips, other compensation, and also on lines 3 and 5, subject to Social Security and Medicare taxes. The amount of premiums paid should also be reported on Line 14, as a separately reported line item, so that the nature and amount of the payments is clearly stated. Please note that this reporting requirement, as per IRS Notice 2008-1, does not change the fact that these medical insurance premiums are deductible by the shareholder when paid.

8. Written Consent for Copies of Tax Returns – Federal law requires that in order to directly provide 3rd party users (e.g. bankers, lenders, insurance agents, etc.) with a copy of your tax return, or with information from your tax return, we must obtain a written consent form from you prior to the release of this information.

9. Affordable Care Act – Given the implementation of the ACA (Affordable Care Act), we understand that as a company owner, you, as well as your employees, may have specific concerns or questions regarding various compliance aspects of the law, so please don’t hesitate to contact us if you’d like to discuss how the changes may impact you and your company.

10. We are here to help! – As the year winds down and you complete your company’s accounting procedures, such as the counting of your company’s year end inventory, and the reconciling of your company’s annual accounting, please let us know if you have any specific questions and/or concerns that we can assist you with – we are here to help!

Posted Dec. 23, 2014/wittenbergcpa.com