IS YOUR BUSINESS USING PART-TIME WORKERS?

Recent job statistics indicate that more employers are using part-timers to deal with variations in workload and for short-term projects. Here are a few tips your business will find useful if you hire part-time workers.

* Communicate clearly with the part-timer. Explain the person's duties, the hours and benefits, and the individual to whom the part-timer will report.

* Tell your full-time staff why you're hiring the part-timer. Make it clear what that person will and won't be expected to do.

 * Provide introductory training for the part-time worker. Assign someone the new person can turn to with everyday questions.

* Monitor the part-timer's progress. Provide feedback on performance and recognition for doing a good job.

Pay attention to these points if you want hiring part-time workers to be a good choice for your company.

WOMEN AND RETIREMENT

Women need to save more for their retirement than men do. Statistics show that women live longer than men, but earn less than men during their working years (which are often fewer due to time taken off for child rearing). According to the Census Bureau, 57% of the population over age 65 are women, and 70% of older people living in poverty are women.

CONSIDER A ROTH FOR RETIREMENT SAVINGS

Using a Roth IRA for retirement savings means you won't get an upfront tax deduction for contributions. But withdrawals in retirement are completely tax-free provided you meet the age and time requirements. Also, you don't have to start taking minimum distributions at age 70½ as you do with other plans.

RETIRING FROM INCOME TAXES?

Full retirement doesn't end your income tax obligations. You'll owe income taxes on withdrawals from a traditional IRA or 401(k) plan, and you'll owe taxes on investment income outside your retirement plans (interest, dividends, capital gains, etc.). Also, if your income exceeds a threshold amount, you could owe taxes on your social security benefits.

RETIREMENT AND TAXES

If you continue working past age 70, you can still add to a 401(k) or Roth IRA, but not to a traditional IRA. At age 70½, you must start withdrawing from a traditional IRA, and unless you're still working, from a 401(k) plan. There is no age requirement for starting withdrawals from a Roth IRA.

UPDATE YOUR BENEFICIARY DESIGNATIONS

Who have you designated as beneficiaries for your insurance policies and retirement accounts? If you can't remember, you're not alone. But it's worth checking.

SELF-EMPLOYEDS GET TAX BREAKS

When it comes to taxes, being self-employed has some advantages. Whether you work for yourself on a full-time basis or just do a little moonlighting on the side, the government has provided you with a variety of attractive tax breaks.

TAX TIP FOR NOVEMBER 2014

Consider a health savings account (HSA). Investing in an HSA gives you a current-year tax deduction while providing a savings account to use to pay out-of-pocket medical expenses currently or in the future. An HSA is not a "use-it-or-lose-it" plan. Any funds in the plan at year-end can be used in future years. Be aware that you can fully fund your HSA up to April 15 of the following year.

REGULATIONS TRY TO CURB CORPORATE INVERSIONS

The IRS and the Treasury recently issued regulations intended to curb the growing use of "corporate inversions." Here's how an inversion typically works: A U.S. company acquires a foreign company in the same business with the intent of changing the corporation's headquarters to the foreign country in order to enjoy that country's lower tax rate. The new rules put more restrictions on inversions in order to make them less attractive to businesses.

IRS COMMISSIONER REVEALS MAJOR CONCERNS

IRS Commissioner John Koskinen recently discussed the major concerns the IRS has as it readies itself for the upcoming tax filing season. The proliferation of tax scams is a big concern with millions of taxpayers already having been taken in by scammers impersonating IRS agents. According to Koskinen, these scammers make threatening phone calls, trying to intimidate victims into providing personal financial information that can be used to steal identities.

A second area of concern is the IRS's involvement in handling the premium tax credits under the Affordable Care Act. Some taxpayers who were given advances on the credits based on income estimates may find that they may be receiving smaller refunds or owing the IRS money after filing their 2014 tax returns.

REVIEW YOUR 2014 DEDUCTIONS

Some itemized deductions are limited by a percentage of your gross income. An example is miscellaneous deductions. These provide a benefit only if your total outlay for costs such as investment fees and unreimbursed employee business expenses exceed 2% of your adjusted gross income.

If you consistently lose out on these deductions, check now to determine if pulling some of January's expenses into December will help.

Keep an eye on your exposure to the alternative minimum tax whenever you plan a strategy for making the most of deductions. Some expenses aren't deductible under those rules.

DON'T FORGET TO TAKE YOUR RMD

Did you celebrate your 70½th birthday in 2014? Do you have a traditional or rollover IRA? If both answers are yes, the deadline for taking the initial required minimum distribution from your retirement account is April 1, 2015.

Required minimum distributions are the smallest amount you can withdraw from your account to avoid penalties, and your 70½th birthday is the triggering start date. That's defined as six months after your 70th birthday.

As an example, if your actual birthday was in July 2014, you'll turn 70½ in January 2015. That means you don't have to take a minimum distribution for 2014. Instead, you're required to take your first minimum distribution no later than April 1, 2016. After the first distribution, you must complete each annual withdrawal by December 31.

IRS CUTS AUDIT RATES IN FACE OF BUDGET CUTS

The IRS is facing budget cuts that will result in fewer audits and other enforcement activities. The IRS reports that it will do 140,000 fewer correspondence audits in 2014 than it did in 2013. The individual audit rate for 2014 is expected to drop to 0.80%, a decline from the 0.96% rate in 2013. That translates to one audit for every 120 tax returns filed in 2014. The audit rates for partnerships, S corporations, and corporations are falling as well.

PAY ATTENTION TO THE IRS RULES FOR CHARITABLE DEDUCTIONS

As the year draws to a close, you may decide to donate cash or property to one or more worthy causes. Besides the satisfaction of helping others, there's another reward for your benevolence: a tax deduction on your 2014 return. But the IRS recommends that you keep the following points in mind:

DON'T LOSE OUT ON THE 2014 GIFT TAX EXCLUSION

Time is running out for making 2014 tax-free gifts. You have only a few more months to use your annual gift tax exclusion for this year, or it's gone forever.

AVOID THESE SIX MISTAKES IN SELLING YOUR BUSINESS

Most entrepreneurs eventually think about selling their businesses, whether as a prelude to retirement or to pursue other activities. In doing so, they often underestimate the effort required for a satisfactory outcome and overestimate the value and salability of their enterprises.
If you're contemplating selling, here are some common mistakes to avoid.

ADVANCE PROJECTIONS RELEASED FOR 2015 TAX NUMBERS

Each year the IRS is required to make inflation adjustments to hundreds of tax numbers in the tax law. Advance projections of what some of the 2015 numbers will be have recently been published.

The top tax rate of 39.6% is projected to start at income exceeding $413,200 for single taxpayers and $464,850 for married taxpayers. The projected standard deduction is $6,300 for singles and $12,600 for married couples filing jointly. The alternative minimum tax exemption for singles will increase to $53,600 and it will increase to $83,400 for married couples filing jointly. The personal exemption amount for 2015 is projected to increase to $4,000.

IMPORTANT REMINDER FOR EMPLOYERS

A reminder to employers: Effective 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.

IRS REMINDS TAXPAYERS ABOUT EDUCATION CREDITS

With schools back in session, the IRS has issued a reminder to taxpayers not to overlook available tax credits for education expenses. Tax credits are applied directly against the income tax you owe. Two available credits: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC can be up to $2,500 annually for an eligible student and is 40% refundable. That means you could get money back when the credit exceeds your tax bill. The maximum LLC is $2,000 and is not refundable. You can claim only one type of education credit per student each year.

How much money did you save last year? If you didn't save at least 10% of your earnings, you didn't save enough. If your savings in 2013 fell short, the only solution is to take charge of your financial future right now and start saving more money.

DELAY PAYING TAXES WITH A LIKE-KIND EXCHANGE

Sitting on a piece of investment property that you would like to sell? By structuring the transaction as a tax-deferred exchange, you can delay paying taxes on the full amount of the gain realized.

USE THE 80-20 RULE TO INCREASE YOUR BUSINESS PROFITS

How well do you know your customers? Which ones are the most profitable? Which ones take most of your time? It's worth taking the time to find out. If your business is like most, the 80-20 rule applies. That is, 80% of your profits come from 20% of your customers.

THERE ARE TAX BREAKS WHEN YOU DO CHARITABLE WORK

If you do volunteer work for a charitable organization and have not kept track of your out-of-pocket expenses, you might be passing up an excellent opportunity to lower your tax bill.

IRS ISSUES ANOTHER WARNING

Another strong warning from the IRS is alerting taxpayers to phone scams that have already resulted in 90,000 complaints and the theft of millions of dollars. Here's how the typical scam works: The caller claims to be from the IRS and, using hostile and abusive language, demands immediate payment of taxes by a prepaid debit card or wire transfer. The IRS reminds taxpayers it will never contact you by phone about owed taxes; the first contact will be by mail. It will never ask for credit, debit, or prepaid card information in a phone call, and it will never request immediate payment over the phone.

DRIVING FOR CHARITY

If you drive your car on behalf of a charitable organization and there is no element of personal pleasure, recreation, or vacation involved, you may take a tax deduction for either your actual vehicle expenses or the standard mileage rate of 14 cents a mile, plus parking fees and tolls.

PARENTS NEED TO DO ESTATE PLANNING

For a parent, estate planning is especially important. The first priority is to make sure your children are protected in the event that something happens to you. Your estate plan should appoint guardians for your minor children, as well as provide for their financial well-being.

USE SUMMER EARNINGS FOR AN IRA

If your children have earnings from summer or after-school jobs, encourage them to open IRA accounts. The additional years of tax-free compounding can produce huge additional savings by the time your children reach retirement age.

WILL BUSINESS GROWTH BRING MORE PROFITS?

Question: My business has not been growing but it seems as though I add more people and equipment without increasing my net profit. What am I doing wrong?

DEALING WITH FINANCES AFTER THE DEATH OF A SPOUSE

The death of a spouse can be a devastating experience, both emotionally and financially. As the survivor, you'll have to make important decisions while you're in what could be the most vulnerable and distracted stage of your life.

2015 HSA CONTRIBUTION LIMITS ANNOUNCED

The IRS recently announced the inflation-adjusted contribution limits for health savings accounts (HSAs) for 2015. HSAs allow taxpayers with high-deductible health insurance plans to set aside pretax dollars that can be withdrawn tax-free to pay unreimbursed medical expenses. The 2015 contribution limit for individuals is $3,350; the limit for family coverage is $6,650. A catch-up contribution of an additional $1,000 is permitted for individuals who are 55 or older.

SAFEGUARD IMPORTANT RECORDS

With the frequent occurrence of natural disasters, the IRS has issued a reminder to taxpayers to safeguard their records with a document backup plan. Backup records should be stored away from the original set. The IRS News Release suggests scanning original records and storing them in the cloud or on storage devices. Individuals should consider taking photos of their home's contents, especially high-value items, to use for insurance or casualty loss claims.

SEPTEMBER 15 TAX DEADLINES FOR BUSINESS

September 15 is an important tax filing deadline for partnerships and corporations. It's the filing deadline for 2013 tax returns for calendar-year corporations that received an automatic extension of the March 17 filing deadline. It's also the filing deadline for 2013 partnership tax returns that received an extension of the April 15 filing deadline. If you need assistance, contact our office at (518) 798-3330.

AMT PAID BY MILLIONS OF TAXPAYERS

In a recent income statistics bulletin, the IRS reported that the alternative minimum tax (AMT) affected a record 4.25 million tax returns and collected $30.48 billion in taxes during tax year 2011. The AMT was created years ago to ensure that high-income taxpayers could not escape all taxes through the use of deductions and credits. The recent report indicated that more than half of the $30 billion of AMT collected in 2011 was from individuals earning between $200,000 and $500,000. The number of taxpayers hit by the AMT has more than tripled since 2001.

It's difficult enough to think about taxes under normal circumstances. Finding yourself amid a divorce action can make this task even more daunting. A little planning, however, may ease this burden.

SHOULD YOU ASK THE COST OF A GIFT?

Imagine this scenario. Your wealthy Uncle John is something of an art collector, buying paintings and sculptures from promising young artists. When he retires, he moves into a small condo in a retirement community and has to downsize his art collection.

GRANDPARENTS CAN HELP WITH COLLEGE COSTS

Are you a grandparent who wants to help pay for a grandchild's college education? You'll find several ways to do this, each with its own limitations and tax consequences.

IRS POSTS "TAXPAYER BILL OF RIGHTS"

The IRS has just issued a "Taxpayer Bill of Rights" that you should be aware of. 

The Rights are divided into ten main categories. According to this "cornerstone" document you have The Right:  

*  to be informed

*  to quality service

*  to pay no more than the correct amount of tax

*  to challenge the IRS's position and be heard

*  to appeal an IRS decision in an independent forum

*  to finality

*  to privacy

*  to confidentiality

*  to retain representation

*  to a fair and just tax system

INVENTORY YOUR DOCUMENTS

Maintain a current list of all your important papers. Where are insurance policies located? Who is your current insurance agent? Where are your original wills? Who is your attorney and accountant? Keeping your inventory of documents and advisors current can be a real help to anyone who needs to assist you should you become incapacitated or die.

SUMMERTIME TAX TIP

If you itemize tax deductions on your income tax return, you can deduct the mortgage interest and property taxes paid for your vacation home. A boat or RV can qualify as a vacation home if it has sleeping quarters, cooking facilities, and a bathroom. If a vacation home also serves as a part-time rental, you can control your tax deductions by changing the number of days you use it yourself.

FUND AN IRA WITH YOUR CHILD'S SUMMER JOB

If your child has a job this summer, encourage him or her to set up an IRA. The amount that can be contributed is $5,500 or the child's earnings, whichever is less. If you wish, you can even provide the cash for the IRA and let your child spend his or her earnings. Roth IRAs are generally a smarter choice for children than traditional IRAs.

COLLEGE OR RETIREMENT?

What's more important – saving for your children's education or your retirement? A typical retirement will generally last longer and cost more than your child's education. If you cannot adequately fund both, maximize your retirement savings first. There are far more options for financing a college education than for funding one's retirement.

PREPARE, PREPARE, PREPARE IF YOU WANT TO GET YOUR BANK LOAN

Getting a bank loan for your business may be more difficult than usual in today's economy. However, if you give your bank a thorough, organized, and well-supported loan proposal, you'll increase your chances of getting the money your business needs.

PLANNING CAN SAVE YOUR VACATION HOME TAX DEDUCTIONS

You can enjoy a vacation home and cut your taxes - with some careful planning and a little discipline.

CONSIDER A DISCIPLINED INVESTMENT STRATEGY

In today's rabbit-fast world, it pays to remember that the tortoise won the race. For investors, dollar-cost averaging - a slow and steady investment plan - can be a winning strategy.

TIPS ON HOW TO SAVE MORE FOR RETIREMENT

Need to save more for retirement? Saving money doesn't have to be hard work. In fact, many successful savers have found simple ways to cut spending and increase their savings.

HEALTH INSURANCE CREDIT INCREASES FOR 2014

You may not have taken the health insurance premium credit for your small business in past years. (It's been available since 2010.) But you might want to consider taking it this year. For 2014, the credit increases from 35% to 50%. When you qualify, you can use the credit to offset your income tax liability by up to 50% of the cost of the health insurance premiums you pay for your employees. 

For details on eligibility requirements, contact our office at (518) 798-3330.

 

NEW LIMIT ON IRA ROLLOVERS

For years, the IRS interpreted the IRA rules to allow taxpayers to do one rollover per year in each IRA he or she owned. In doing a rollover, the taxpayer is not taxed on the funds taken from the IRA so long as the funds are redeposited into an IRA within 60 days of the withdrawal. 

A recent court ruling stated that the rollover limit should be applied on an aggregate basis, meaning that only one rollover per year is allowed for all IRAs owned by the taxpayer, not one for each. The change becomes effective January 1, 2015. 

Contact us at (518) 798-3330 for assistance before planning any IRA rollover to be sure you don't end up with a tax surprise.

HAVE YOU CHECKED YOUR WITHHOLDING LATELY?

Did you receive a large tax refund or owe a large balance due on your 2013 income tax filing? If so, it may be time for you to check your withholding. Changing your withholding is as simple as filing a new Form W-4 with your employer. 

The smart taxpayer will calculate withholding to be as close to the actual amount 2014 tax liability will end up being. That will prevent you from being penalized for underpayment and from giving the IRS interest-free use of your money for a year. 

 Keep these general rules in mind. You won't face an underpayment penalty if you pay for 2014, through withholding or quarterly estimated payments, at least 100% of your 2013 tax liability (110% if your adjusted gross income for 2013 is over $150,000), or if you pay at least 90% of what you'll owe for 2014.

TAKE A PENALTY-FREE IRA WITHDRAWAL FOR MEDICAL EXPENSES

Are you considering withdrawing funds from your traditional IRA to pay unexpected medical costs?

EVERY SMALL BUSINESS SHOULD ESTABLISH CONTROLS

Every week reporters publish stories about companies that have lost thousands, even millions of dollars because of fraud. How can you protect your business from such losses?

EMERGENCY SAVINGS: HOW MUCH IS ENOUGH?

We all need an emergency fund, but what's considered "an emergency" and how much emergency savings is enough?

CAPITALIZATION VS. EXPENSING

The new IRS regulations on capitalization vs expensing are complex. But the part of the regulations that concerns most small businesses makes it easier for them to comply.

HEALTH INSURANCE TAX CREDITS ARE GOOD MEDICINE FOR SMALL BUSINESSES

Small businesses may be missing out on an important new tax perk related to health insurance. And the stakes are even higher in 2014.

WHO NEEDS AN "EMPLOYER IDENTIFICATION NUMBER"?

If you do any of the following, you will need an Employer Identification Number (EIN) from the IRS.

RULE FOR DEDUCTING MEDICAL EXPENSES HAS CHANGED

You may be familiar with the old tax rule that let you take an itemized deduction for unreimbursed medical expenses that exceeded 7½% of your adjusted gross income. For 2013 and future years, the income threshold increases to 10% for taxpayers under age 65. Those 65 and older may continue to use the 7½% threshold through the year 2016.

TAKE A DIFFERENT ROUTE TO A ROTH IRA

If your income exceeds certain levels, you cannot make contributions to a Roth IRA. However, you can convert a traditional IRA to a Roth IRA no matter how high your income. Roth IRAs are popular because qualifying distributions are tax-free and annual distributions are not required at age 70½. A conversion to a Roth is a taxable event, so factor that into your analysis. For more information, call us at (518) 798-3330.

TAKE YOUR CHOICE FOR DEDUCTING HOME OFFICE EXPENSES

You now have a choice in how you deduct the expense of a home office. Starting with your 2013 tax return, you can either deduct the actual expenses connected with your home office, or you can use the simplified method of deducting $5 per square foot of the part of your home used for business, up to a maximum deduction of $1,500. 

Remember, the deduction isn't available just because you do work at home; you must use part of your home regularly and exclusively as your principal place of business or where you meet customers, clients, or patients in the normal course of business.

EQUIPMENT WRITE-OFF DECREASES FOR 2014

In recent years, businesses could expense up to $500,000 of equipment purchases in the year of purchase, with a $2,000,000 annual purchase limit. In addition, bonus depreciation was allowed for new equipment purchases. 

Because Congress did not extend these provisions for 2014, businesses can now only expense $25,000 of new or used equipment purchases. The deduction is reduced dollar-for-dollar when total asset purchases for 2014 exceed $200,000. Also, the 50% bonus depreciation that applied in 2013 is no longer available. 

Congress may extend these provisions, or they may not. Check with us for the latest when you're making equipment purchasing decisions this year.

IRS ALERTS TAXPAYERS TO LATEST TAX SCAM

The IRS has issued a warning about the latest phone scam. The caller claims to be from the IRS and tells the intended victims they owe taxes which must be paid immediately with a pre-paid debit card or wire transfer. Individuals who don't pay up are threatened with arrest or loss of their business or driver's license. 

Watch for these signs that the call is a scam: 

• Use of fake IRS badge numbers
• Caller knows the last four digits of your social security number
• Caller ID appears as if IRS is calling
• Bogus IRS e-mail is sent as follow-up
• Second call claims to be from police or DMV, again supported by fraudulent caller ID

Don't respond in any way to these scams; instead forward the scam e-mail to phishing@irs.gov, or file a complaint at FTC.gov.

 

PARENTS CAN CUT TAXES WITH CHILD-RELATED CREDITS

Are you a parent? Give yourself some credit – a child-related tax credit, that is. Here are two that can reduce your 2013 federal income tax liability.

THE AMT: WILL THIS TAX APPLY TO YOU?

Though you might prefer to not think about the AMT, certain income and deductions, known as preference items, affect the way the tax will apply to you.

WHO MUST FILE A 2013 INCOME TAX RETURN?

The rules for filing 2013 tax returns are straightforward for most people. Marital status, age, and income level are generally the determining factors. Here's a quick overview of the income levels at which a 2013 return is required.

CHECK THE TAX RULES BEFORE LENDING MONEY TO RELATIVES

There are many worthwhile reasons to lend money to a relative. For example, you may want to help a child or sibling continue their education or start their own business.

DON'T OVERLOOK THE "NANNY TAX"

As you review your filing requirements for 2013, make sure you don't overlook the so-called "nanny tax." If you have a household employee, you could be liable to pay state and federal payroll taxes.

IRS ANNOUNCES NEW FSA RULE

Flexible spending accounts (FSAs) allow taxpayers to set aside pre-tax dollars to pay for out-of-pocket medical expenses. The drawback has been the fact that unused amounts each year are forfeited. Plans could provide a 2½ month grace period to use up unspent set-asides.  

Now a change announced by the IRS adds more flexibility to these accounts. Plans can be modified by employers to allow up to $500 of unused amounts to be carried over into the following year. Health FSAs cannot have both the old 2½ month grace period and the $500 carryover; they can have one or the other (or neither).

1099 REPORTING DUE IN JANUARY

Nearly every company, large or small, has to file Form 1099-MISC with the IRS and send a copy to recipients by January 31, 2014. 

You use Form 1099-MISC to report miscellaneous payments to nonemployees. This includes fees for services paid to independent contractors, such as consultants, lawyers, cleaning services, and others. Generally, you don't report fees paid to corporations, but there are exceptions (payments to lawyers, for example). 

For details or filing assistance, contact our office at (518) 798-3330.

EMPLOYEES GET MORE THAN A PAYCHECK

Surveys show that employees tend to underestimate the amount of money that their employer is spending on employee benefits. It's up to you to get them to realize the compensation they are receiving.

ARE DISABILITY INSURANCE BENEFITS TAXABLE?

Have you decided to include disability insurance as part of your financial plan? If so, the next decision is how to pay the premiums. Here's why: The choice you make now can affect the taxability of the benefits received later.

SHOULD YOU USE A BANK LINE OF CREDIT?

Just exactly what is a bank line of credit and who should be using one? A bank line of credit is not a great deal different from a credit card. You make draws against your line of credit from time to time as you need cash. You pay interest only on the amount of the loan balance outstanding. You are expected to make payments and occasionally bring your outstanding balance to zero. Let's look at an example.

TIME IS RUNNING OUT FOR 2013 TAX CUTTING

There's not much time left for you to make beneficial tax moves for 2013. Consider these possibilities.

TAX STRATEGIES FOR CHARITABLE GIVING

Now that the holiday season has arrived, you might decide to step up your charitable donations to boost your deductions for 2013. Here are six timely strategies.