TAKE TIME TO REVIEW THE HEALTH OF YOUR BUSINESS

As an owner and/or manager, you probably spend a lot of time monitoring business operations and dealing with everyday problems. But a longer-term approach is also useful.

GET A HEAD START ON YOUR FORM 1099 REPORTING

No matter what type of business you operate, January is busy. You're trying to get your business off to a good start in the new year, you're closing the books on last year, and you have to complete payroll and 1099 forms by month-end. Why not make time this month to get a head start on at least one of those chores?

POOR RECORDKEEPING MEANS LOST DEDUCTIONS

What's worse than keeping records? Losing tax deductions because you didn't keep records. Tax court cases routinely deal with "unsubstantiated" expenses – business costs that taxpayers claim but cannot prove – and taxpayers routinely lose. Every legitimate and supported deduction can save you tax dollars. As the end of the year approaches, take time to make sure your records are in order. Don't want to deal with reams of paper? Software programs and apps can ease the burden. Give us a call at (518) 798-3330 for suggestions on how to improve your recordkeeping.

CHECK UNCLAIMED PROPERTY LISTS FOR MISSING MONEY

Discovering unexpected money is always a pleasant event and generally even more so this time of year. You don't need to dig between the couch cushions to find it. According to the National Association of Unclaimed Property Administrators (NAUPA), state governments have $41.7 billion in unclaimed property on their books. While it may sound like a scam, you could have a legitimate claim to money such as abandoned bank accounts and utility security deposits that you forgot to collect when you moved. You can claim the funds at no cost. Start by checking http://www.MissingMoney.com, a website officially endorsed by the NAUPA.

DID YOU PAY DOMESTIC EMPLOYEES IN 2015?

Nannies, housekeepers, caregivers – the people who make your home life easier – are your employees, and you're required to comply with income and payroll tax rules. For 2015, you'll need to withhold social security and Medicare taxes when you pay your worker $1,900 or more during the year. You'll also need to provide year-end tax forms and wage statements and file a special schedule with your personal federal income tax return. Contact us at (518) 798-3330 for details.

 

BE AWARE OF 2016 PAYROLL RATES

The Social Security Administration announced the 2016 wage base for computing the amount of payroll tax will be $118,500, the same as 2015. The wage base is the maximum amount of wages subject to the social security portion of the payroll tax you may know as "FICA." The total FICA rate is composed of two parts and the rates for both remain the same for 2016. The social security tax portion is 6.2% of an employee's wages on amounts up to $118,500. The basic Medicare portion is 1.45% of an employee's wages, no matter the amount. Note that employers must also withhold an additional 0.9% Medicare tax on wages over $200,000.

WILL YOUR EMPLOYEES STAY AFTER THE HOLIDAYS?

A survey of employees and human resources professionals showed that what employees want and what the professionals think they want may not be the same. According to the survey, one in three employees is looking for a new job. Reasons include salary levels and lack of a clear career path. If employee retention is a problem at your company, perhaps you're not aligning your business interests with that of your employees. What to do? Start by asking employees what motivates them. The survey showed employees are willing to share – if you ask the right questions.

NEED MONEY TO PAY BILLS? RAIDING YOUR 401(K) IS NOT A GOOD IDEA

When you're short of cash, raiding your 401(k) plan may seem like a good idea. Here are two reasons why it isn't.

MAKE USE OF YOUR 2015 GIFT TAX EXCLUSION

This year you can give up to $14,000 to as many individuals as you want without any gift tax liability. If you're married and your spouse joins in the gift, you can, as a couple, elect to give $28,000 to each person with no gift tax liability. Once December 31, 2015, has come and gone, your 2015 gift tax exclusion is also gone. If you plan to make gifts this year, remember that your gifts must be completed by then.

 

GOOD COMMUNICATION KEEPS YOUR CUSTOMERS HAPPY

As a business owner, you know how much effort goes into attracting new customers. So once you've found a new customer, you want to keep that customer as long as possible. Good communication can help.

TAX PLANNING IS GOOD FOR CORPORATIONS TOO

If you own a calendar-year corporation, you can benefit from planning moves you make before December 31. For example, corporations can accelerate or defer income or deductions to stay within a certain tax bracket. You'll also want to look at your corporate alternative minimum tax exposure to determine whether you qualify for an exception to the tax. Finally, reviewing estimated tax payments can save penalties. Call us at (518) 798-3330 for more business planning strategies.

2016 HEALTH CARE ENROLLMENT BEGINS NOVEMBER 1

The health insurance Marketplace (www.healthcare.gov) "open enrollment period" began November 1st  for 2016 individual health insurance coverage. Open enrollment is the annual period of time during which health insurance companies must accept your application regardless of your health history. Once open enrollment is over – January 31, 2016, for 2016 policies – you can only get coverage if you have circumstances that allow you to qualify for a special enrollment period.

BREAKEVEN ANALYSIS HELPS WITH BUSINESS CHOICES

Breakeven analysis is an important and useful tool in business. Whether you're starting a new business, expanding current operations, contemplating an acquisition, downsizing, or approaching banks and other potential lenders, you'll want to know your breakeven.

DECIDE WHEN TO START SOCIAL SECURITY BENEFITS

Whether you should take social security retirement benefits at the earliest possible date or defer benefits until reaching normal retirement age (or even age 70), depends on several factors.

ITEMS ON YOUR 2014 RETURN CAN AFFECT 2015 PLANNING

As year-end approaches, remember to check your 2014 federal income tax return for items that can affect your 2015 planning.

GET READY FOR THE "CADILLAC" TAX

The 2010 Affordable Care Act added a 40% excise tax on high-cost employer-sponsored health insurance (sometimes called "Cadillac" plans). "High-cost" means plans with an annual cost of more than $10,200 for an individual and $27,500 for a family. Beginning in 2018, the tax applies to the amount above that limit. The tax is assessed annually, and is permanent, nondeductible, and applicable to many types of health coverage.

Because of its potentially broad impact, you'll want to start reviewing the health insurance coverage you offer to employees to learn how your business will be affected.

The IRS is just beginning to issue guidance. We'll keep you informed as information is released.

ESTATE EXECUTORS HAVE ANOTHER RESPONSIBILITY

A law effective as of July 31, 2015, included provisions that require certain executors to file a statement with estate beneficiaries and the IRS, notifying both of the value of property as reported on the estate return. Unless an exception applies, the beneficiaries can claim no more than that value when the property is later sold or disposed of.

Under the new rule, the statement is due within 30 days after the estate return is filed or 30 days after the due date of the estate return, whichever is earlier. However, if you're required to file this new statement before February 29, 2016, the due date for filing and furnishing the statement is delayed until February 29, 2016.

We'll keep you updated as guidance becomes available.

LAW REVISES DUE DATES FOR 2016 RETURNS

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 changed due dates for some 2016 federal business returns (the ones you'll file in 2017).

Here's a sample of the changes:

Partnerships (Form 1065) – 2½ months after the close of the tax year. For calendar-year partnerships, that means a due date of March 15.

C corporations (Form 1120) – 3½ months after the close of the tax year. For calendar-year C corporations the due date will be April 15. Note there is a special rule for C corporations with a June 30 year-end. These corporations will not have to comply with the new due dates until after 2025.

S corporations (Form 1120S) – No change. The due date remains 2½ months after the close of the tax year (March 15 for calendar-year corporations).

Call us at (518) 798-3330 for more information.

DISCUSS MONEY BEFORE YOU MARRY

Couples often enter into marriage without ever having had a serious discussion about financial issues. As a result, they find themselves frequently arguing about money. If you are planning a wedding, here are some steps you can take to get your marriage off to a good financial start.

A QUICK RECORDKEEPING GUIDE

Is your file cabinet overflowing? Do you hesitate to purge tax information because you're not sure what to keep and what to discard? Here's a quick guide to help you cut through the clutter.

WATCH YEAR-END MUTUAL FUND TRANSACTIONS

The income tax effects of mutual funds can be complex, and poorly timed purchases or sales can create unpleasant year-end surprises.

OCTOBER 15 IS A FINAL TAX DEADLINE

Time is almost up if you requested a six-month extension to file your 2014 federal income tax return. October 15 is the final date for filing your 2014 return; the IRS generally does not give filing extensions beyond that date.

October 15 is also the deadline for undoing a 2014 conversion of a traditional IRA to a Roth IRA. If you converted your traditional IRA to a Roth last year, you can switch it back to a regular IRA without penalty if you do so by October 15.

Want to know more? Contact our office at (518) 798-3330.

AVOID UNDERPAYMENT PENALTIES

Check the total taxes you've already paid in for the year through withholding from your wages and/or quarterly estimated payments. Are you underpaid? Consider adjusting your withholding for the final months of 2015 or increasing your remaining quarterly estimate. If you employ household workers, include the payroll taxes you'll owe for them in your calculations. Call us at (518) 798-3330 for assistance.

TAKE TIME FOR TAX PLANNING

Take time to review your 2015 tax situation while there are still a few months to make adjustments. Can you benefit from bunching your itemized deductions? Will increasing your retirement plan contributions cut your tax bill? An investment in a tax review could make a significant difference in your final tax bill for the year.

MANAGING AGI COULD PROTECT TAX BREAKS

How close to the edge are you when it comes to tax phase-outs? As you begin your fall tax planning, consider the effects of these benefit-limiting provisions.

Will your child have to file a tax return?

Your child may have to file a 2015 income tax return depending on several factors, including the total amount of income he or she received. For instance, if wages are the only source of income, your child can generally earn up to $6,300 during 2015 before a federal tax return is necessary. However, unless your child can claim an exemption from withholding, a return may be required even when wages earned are lower than the filing requirement. That's because filing is the only way to claim a refund of overpaid taxes. In addition, self-employment income, tips, and interest, dividends, and stock sales can affect the filing requirement. Contact us at (518) 798-3330 if you want details.

TAX TIP: CONSIDER MAKING TAX-FREE GIFTS

If you are in a position to give, making annual gifts can be an excellent strategy for reducing both your estate and income tax liability. Doing your gift-giving well before year-end is especially smart if you are giving income-producing property. You will then remove more income from your 2015 tax return. The annual tax-free limit for 2015 gifts is $14,000 to as many individuals as you like.

BACK TO SCHOOL? CHECK THIS TAX CREDIT

If you or a member of your family is off to college this fall, you may be eligible for the American Opportunity Tax Credit. Eligible students may take this credit for the first four years of higher education. The credit can be up to $2,500 annually. Expenses that qualify for the credit include tuition, fees, and related expenses. Forty percent of the credit is refundable, meaning you may be able to get up to $1,000 of the credit as a refund even if you don't owe any taxes.

IRS GIVES WORKER CLASSIFICATION CRITERIA

Since independent contractor payments are not subject to payroll taxes, there is a temptation to classify some employees as independent contractors when they should not be. The IRS uses certain criteria to help determine who should be classified as an employee subject to payroll taxes and eligible for employee benefits. Here's a partial list –

*                    Who controls when, where, and how the work is to be done?

*                    Who sets the working schedule?

*                    Is the payment by the hour or by the job?

*                    Whose tools will be used to accomplish the work?

*                    Does the contractor provide services to the general public?

ACCURATE INVENTORY NUMBERS ARE CRUCIAL FOR YOUR BUSINESS

For many companies, inventory is a significant dollar amount on the company's financial statements. So it's crucial that recorded inventory balances reflect actual values.

HOW TO HELP YOUR CHILD GET STARTED IN BUSINESS

Perhaps you're thinking of helping one of your children get started in business. Since the failure rate for new businesses is high, you need to do whatever you can to increase your child's chances of success.

ARE ITEMIZED DEDUCTIONS WORTH THE EFFORT?

Knowing the difference between the standard and itemized deduction might save you a lot of time and trouble, and some taxes to boot.

POSTPONE TAXES WITH THIS STRATEGY

The tax law provides a valuable tax-saving opportunity to business owners and real estate investors who want to sell property and acquire similar property at about the same time. This tax break is known as a like-kind or tax-deferred exchange.

BUSINESS TIP: DON'T SELL PROPERTY; EXCHANGE IT

A tax-deferred exchange is a tax planning technique which should be considered by any taxpayer that is relocating or disposing of property. Often referred to as a "tax-free exchange," the tax-deferred exchange allows you to exchange certain business or investment property for other "like-kind" business or investment property and pay no income taxes currently. Your tax liability is deferred until you later dispose of the property for which you traded. Exchanges require careful planning and professional assistance.

SHOULD YOU INCORPORATE YOUR BUSINESS?

One of the first decisions you face as a new business owner is whether or not to incorporate your business. The biggest advantage of incorporating is limitation of your liability. Your responsibility for debts and other liabilities incurred by a corporation is generally limited to the assets of the business. Your personal assets are usually not at risk, although there can be exceptions to this general rule. The trade-off is that there is a cost to incorporate and, in some cases, tax consequences.

Consult our office and your attorney for guidance in selecting the legal entity that is best for your business.

DON'T OVERLOOK ABOVE-THE-LINE DEDUCTIONS

Even if you don't itemize deductions on your tax return, you may be entitled to certain "above-the-line" deductions. These deductions are subtracted from your income to arrive at your adjusted gross income, an important number because it determines your qualification for certain tax credits and various tax breaks. Above-the-line deductions include such things as IRA contributions, health savings account contributions, student loan interest, moving expenses, health insurance and retirement plan contributions if you're self-employed, and alimony paid.

SUMMER JOB TAX TIP

If your child has a summer job, consider opening an IRA for him or her. According to the tax rules, anyone under age 70½ who has earned income can contribute to a traditional IRA. There's no age restriction for Roth accounts, though the amount of the contribution phases out at higher income levels. The advantage of a Roth over a regular IRA is that withdrawals in retirement will be tax-free. The contribution limit for both kinds of IRA for 2015 is the lesser of the child's earned income or $5,500.

MIDYEAR TAX PLANNING TIP

Take time this summer to examine your investment portfolio for potential tax savings, such as selling stocks that are worth less than you paid to offset your capital gains. You might also donate appreciated stock that you have held for more than one year to charity and avoid capital gains altogether – plus getting a deduction for the stock's fair market value if you itemize. Another step to consider: Buy investments that pay tax-free income, such as municipal bonds, if you're going to be subject to the new 3.8% tax on unearned income.

SEVEN SUMMERTIME TAX-SAVERS

Summer is here and so are tax-saving opportunities. Here are seven suggestions for cutting your tax bill. 

CONSIDER TAXES WHEN YOU CHANGE JOBS

Taxes may be the last thing on your mind when you're changing jobs, but overlooking their impact could mean missed tax-saving opportunities.  

TRACK USE OF YOUR VACATION HOME TO MAXIMIZE TAX BREAKS

If you own a vacation home (some boats and recreational vehicles also qualify) that you also rent out to others, keep track of who uses it during the year to maximize your tax breaks. 

IRS LAUNCHES NEW "MISCLASSIFICATION INITIATIVE"

How you classify your workers – as "independent contractors" or "employees" – matters a great deal to the IRS. The IRS is aware that employers prefer to treat workers as independent contractors to avoid paying fringe benefits and payroll taxes. The IRS estimates that 80% of workers who are classified as independent contractors are actually employees. About 100 new auditors have been hired with the specific task of investigating misclassifications, and the government is estimating that the crackdown will generate at least $7 billion in revenue over the next ten years. For guidance in classifying your workers, contact our office at (518) 798-3330.

IRS PUBLISHES HELP FOR ID THEFT

The IRS website contains useful information on how to avoid becoming a victim of identity theft, plus steps to take if you do become a victim.

Here are the warning signs that you may have had your identity stolen:

1.      The IRS notifies you that more than one tax return was filed using your social security number.

2.      You're notified that you owe additional tax or you've had collection actions taken against you for a year you did not file a tax return.

3.      IRS records indicate you received wages from an employer unknown to you.

If you become a victim, the IRS recommends that you take the following steps:

1.      File a police report.

2.      File a complaint with the FTC.

3.      Contact one of the three credit bureaus to place a fraud alert on your account.

4.      Close any financial accounts opened without your permission.

5.      Respond immediately to any IRS notice, according to the instructions given.

6.      Complete IRS Form 14039 "Identity Theft Affidavit."

7.      Continue to pay your taxes and file your tax return, even if by paper.