4th Quarter Estimates are not due until January 15, 2017, but it may be beneficial for you to make your payments to the states before December 31, 2016. If you make these payments before the end of the year, you receive a tax deduction in 2016 rather than waiting until 2017. There are other factors that come into play to determine whether or not it is beneficial to make these payments early so if you have any questions, please do not hesitate to give our office a call (314-993-4285) or email.
If we compute estimates for you each quarter, we will be sure to get you the amounts to pay prior to the last week of the year (around December 22nd at the latest) as we are closed from the 23rd through the end of the year. If you are traveling and need the estimated payments sooner, let us know. Otherwise, look for an email from us with the amounts to pay that week!
Most of the country is still buzzing over the improbable victory of Donald Trump over Hillary Clinton, but as you expect of us, we’re considering the impact his first year in the Presidency may have on business and taxes. If you haven’t seen the President-Elects published plan for his first 100 days in office, a link to the transcript is as follows: https://assets.donaldjtrump.com/_landings/contract/O-TRU-102316-Contractv02.pdf.
The President-elect’s proposals will impact a cross-section of American wage-earners. We’ll wait for more concrete proposals to come out once the inauguration is completed in January, but we would like to stress one of our 2016 hot topics: Overtime pay.
The Department of Labor has issued final regulations concerning the definitions of exempt and non-exempt employees as regards the payment of overtime rates. These regulations must be enacted beginning December 1, 2016, and the President-elect has vowed to repeal this legislation in the first 100 days of his Presidency.
You’ve heard me speak on the subject of the HKA Informed Taxpayer Rule. If you haven’t heard of us expound on this before, our Rule looks like this: We believe it is our responsibility to make you aware of business and personal risk associated with positions you may want to take on your business and personal tax returns. You, as an informed taxpayer, make an assessment of the risk associated and your tolerance for that level of risk. We support your decisions (of course we never and you never promulgate fraud of any kind).
The DOL Overtime rule going live on December 1 (today!) would fall under this Rule. The 100 day plan, may be better described as a wish list. It is in no way a guarantee that all of these proposals will be adopted by this fractured and rancorous Congress. Our advice is simple: Adopt processes and procedures which enable you and your business to comply with the new regulations fully. Compliance with these new rules is not easy, but penalties are stiff and should be considered before you accept the business risk of non-compliance.
Please call our office at 314-993-4285 if you have any questions.
One Firm Concept. What exactly does this mean? Over the past 20+ years of serving various capacities in the public accounting industry I’ve identified one critical flaw in most all accounting firm structures: Your Guy.
We all know this, and we’ve all asked this question, that’s great Bill, but who is my guy/gal? Who do I call for X? Who will be working on my return? Who is going to do my stuff? Who do I call when I can’t sleep about something? Who do I call when plans change or I’m buying a company? Who do I send my stuff to? Who will call me with questions? Who will call me for missing information?
Scores of different questions all asking for the same assurance, I/the customer wants one point of contact. Here’s the flaw: What sets dynamic environments apart from the normal business? They aren’t insular. The flaw in the one point of contact concept is its inability to use a fresh set of eyes, they become insular within a project. The same person misses the same thing, takes the same things for granted, and generally approaches a project from the same direction every time.
One of our core cultural attributes is to attack a problem from a direction differently than anyone else. The One Firm Concept is the embodiment of this cultural difference. We utilize technology and discipline in maintaining a robust CRM, called Office Tools or OT, to track/record/task/monitor/complete all projects phone calls and life experiences from our conversations and meetings with you. Why do we send emails with our Stream of Consciousness notes? To populate our evolving CRM with our latest conversations. This very unique method of conducting business with our clients allow any person in the firm to answer your question, work on your project, and provide expertise or answers on a timely basis. The One Firm Concept gives our clients the ability to call our office and more than likely get an answer even if the normal suspects are not available. It allows us to more effectively answer your emails if the normal suspect is not available. Most importantly, it helps keep us moving/evolving/challenging for you, our Client. The side benefit to HKA? We are never bored, we’re always seeing something new and we’re always challenging ourselves and our team members to create a fun, dynamic, professional environment geared toward serving our Client’s needs.
Yes, there are point of contacts, Yes, you can ask to speak to the same person every time you call, but, when you really need something now, rest assured the One Firm Concept will be there to deliver for you when you need it the most, and every other day!
Section 2704 is the section of the Internal Revenue Code (the tax bible) used to set the rules for how discounts are computed for transfers of businesses or rights within a family. The Internal Revenue Service is proposing changes on these rules.
One of the most popular structures utilizing this Code, and my personal favorite, is the family limited partnership (FLP). The FLP is created by the family to hold assets. Normally the assets belong to Mom and/or Dad (Parent) and they desire to get the potential growth in these assets, and the asset value itself, out of their estate. Parent creates the entity and transfers the assets into it. Parent normally owns a general partner interest and controls the entity. Parent gifts the limited interest to heirs. Because the recipient is not able to vote, leverage, or sell their interest the fair value of the interest given is less than the value of the underlying assets.
The technique is a very powerful way of savoring the current estate tax exemption. If the gifting can utilize a 35% discount of value, an estate exemption of $5.3M allows you to give entities with underlying assets of $8.15M!
This new Proposed Regulation, will make the calculation of the fair value more difficult and certainly, at least initially (until we figure something else out) reduce the discount eligible to the gift.
HOWEVER, the other goal of the planning tool is to remove the value of the gift from the estate and retain control of the total earning power of the assets given. THESE attributes are not lost with the proposed regulation.
Are you interested in learning more about FLP’s? Please give us a call at 314-993-4285.
Form 1099 is the all-purpose player for the Internal Revenue Service. The form is used for many ordinary reporting items:
- Earnings for non-employee services
- Pension and IRA distributions
- Interest and dividends
The key to the form, make sure you file it. Every business tax return has a question which asks if you have filed all 1099’s which were required to be filed. Not sure who would answer no to this question, but the Service is serious about yoking the threat of penalties on US business to get more income reporting forms filed. A few quick general issues to consider:
- W2 and 1099: There is no instance where a W2 employee would also get a 1099. No the income threshold limit does not apply in this instance. No an employee cannot also have other non-employee earnings that shouldn’t have already been included in the W2. No bonuses cannot be put on a 1099 they must run through the W2.
- Non-employee earnings vs Other income: If you are paying someone to work for your business and you are using any of the up to date accounting systems to run your business, make sure the non-employee/contractor is getting a 1099 for Non-employee earnings. The difference between Other Income and Non-employee earnings? Non-employee earnings is subject to FICA tax when they report the income on their personal return. Other Income does not require FICA tax on those earnings. (Technically it’s self-employment tax and not FICA, but it’s really the same thing).
- Thresholds: If you are already running one 1099 for a contractor, stop stressing over the threshold limit and run it for everyone. What’s your downside, over-reporting? Allowing someone to not pick up income? Although the income does not have to be reported on a 1099, the recipient still has a responsibility for reporting it on their personal return.
- Penalties: The penalty for failure to file a 1099 is $100 per payee statement. File everyone and don’t worry about a penalty. The penalty is the lesser worry, the bigger worry is the cost of scrutiny on your business practices and income tax returns the 1099 audit could cause. Even if the entire return is correct, the direct and intangible costs of an audit is worth avoiding.
The 1099 reporting season will be upon us soon. If you want us to assess how we can help you conform to the reporting requirement, please call us soon at 314-993-4285 so we can reserve time in our schedule.
If your organization is an applicable large employer, you must report information about the health care coverage you offered to your full-time employees. As an employer, it’s not too early to start thinking about these seven facts related to your information reporting responsibilities under the health care law.
- The health care law requires ALEs to report information about health insurance coverage offered to its full-time employees and their dependents as well as to the IRS.
- ALEs must report information about themselves, the coverage they offered – if any – and the individuals covered under the policy.
- ALEs are required to furnish a statement to each full-time employee that includes the same information provided to the IRS by January 31, 2017.
- ALEs that file 250 or more information returns during the calendar year must file the returns electronically.
- ALEs must file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage with the IRS annually, no later than February 28, 2017 or March 31, 2017 if filed electronically. Forms 1095-C are filed accompanied by the transmittal form, Form 1094-C.
- Self-insured employers that are applicable large employers, and therefore are also subject to the information reporting requirements for offers of employer-sponsored health insurance coverage, must combine reporting under both provisions by filing a single information return, Form 1095-C, and transmittal, Form 1094-C.
- The ACA Assurance Testing System opened November 7, 2016 for tax year 2016 testing. Software developers – including employers and issuers who passed AATS for tax year 2015 – will not have to retest for tax year 2016; the Tax Year Software Packages will be moved into Production status. New participants need to comply with test requirements for tax year 2016. For more information, see Publication 5165, Guide for Electronically Filing ACA Information Returns for Software Developers and Transmitters.
Applicable large employers can find a complete list of resources and the latest news at the Applicable Large Employer Information Center.
If you have any questions please do not hesitate to give us a call at our office, 314-993-4285.
This information was received from IRS Tax Tips Issue Number: HCTT 2016-75.
A new federal law moves up the W-2 filing deadline for employers and small businesses to Jan. 31. The new law makes it easier for the IRS to find and stop refund fraud. It also delays some taxpayer refunds. Those taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit won’t see refunds until Feb.15, at the earliest.
Here are some key points to keep in mind:
- Protecting Americans from Tax Hikes (PATH) Act. Enacted last December, the new law means employers need to file their copies of Forms W-2 by Jan. 31. These forms also go to the Social Security Administration. The new deadline also applies to certain Forms 1099. Those reporting nonemployee compensation such as payments to independent contractors submitted to the IRS are due Jan. 31. Employers have long faced a Jan. 31 deadline in providing copies of these forms to their employees. That date won’t change.
- Different from past deadline. Employers normally had until the end of February, if filing on paper, or the end of March, if filing electronically, to send in copies of these forms. The IRS is working with the payroll community and other partners to spread the word.
- Helps stop fraud or errors. The new Jan. 31 deadline will help the IRS to spot errors on returns filed by taxpayers. Having these W-2s and 1099s sooner will make it easier for the IRS to verify legitimate tax returns and get refunds to taxpayers eligible to receive them. The changes will allow the IRS to send some tax refunds faster.
- Some refunds delayed. Certain taxpayers will get their refunds a bit later. By law, the IRS must hold refunds for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. This means the whole refund, not just the part related to the EITC or ACTC.
- File tax returns normally. Taxpayers should file their returns as they normally do. The IRS issues more than nine out of 10 refunds in less than 21 days. However, some returns may need further review. Whether or not claiming EITC or ACTC, the IRS cautions taxpayers not to count on getting a refund by a certain date. Consider this fact when making major purchases or paying debts.
- Use IRS.gov online tools. Starting Feb. 15, the best way to check the status of a refund is with the Where’s My Refund? tool on IRS.gov.
Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers may need their Adjusted Gross Income amount from a prior tax return to verify their identity. They can get a transcript of their return at www.irs.gov/transcript.
If you have any questions please do not hesitate to give us a call at our office, 314-993-4285.
This information was received from IRS Special Edition Tax Tip Issue Number: 2016-16.
If you’ve stopped by our office recently, you’ve seen some pretty interesting decor additions. All of the “under construction” themed decorations were part of our first quarter planning and goals. As part of our “Why” we came up with a goal to complete 43 projects by the end of the quarter, 10/31/16. Once a project was completed, we added another block to our personal arch (paying tribute to our hometown). The last day of the quarter we completed our 43rd project and are happy to say we reached our first quarter goal! To celebrate, we took the whole office on the guided Beermaster tour at Anheuser Busch Brewery.
Our theme for this second quarter is The Final “Account”down. The quarter ends 1/31/17 so stay tuned for updates! Call us if you want to learn more about what we’re doing at 314-993-4285!
Here at HKA, our clients are our number one priority. We’ve been spending a lot of time lately on strategic planning to ensure that everything we do as a firm is geared with the client in mind. We are very inspired by Simon Sinek’s TED Talk, Start With Why: How Great Leaders Inspire Action, and we want to share our Why (along with our How and our What) with you. Click the interactive WHY, HOW, WHAT links to learn more about why we do what we do.
We passionately provide options and solutions to our clients to enable them.
We hired an outside consulting firm to help us stop saying who we are and to start doing things that exemplify our vision, our standards, our WHY. We’ve refocused our roles and services in order to provide a more concentrated approach to serving our clients.
Strategic planning and visioning helped us define what sets us apart from other firms. We take pride in our company values, culture, and standards. We take pride in our client-focused services. We take pride in not only what we do, but what we can do for you.
Giving to charity may make you feel good and help you lower your tax bill. The IRS offers these nine tips to help ensure your contributions pay off on your tax return.
- If you want a tax deduction, you must donate to a qualified charitable organization. You cannot deduct contributions you make to either an individual, a political organization, or a political candidate.
- You must file Form 1040 and itemize your deductions on Schedule A. If your total deduction for all non-cash contributions for the year is more than $500, you must also file Form 8283, Non-cash Charitable Contributions, with your tax return.
- If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event, or other goods and services.
- Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.
- Fair market value is generally the price at which someone can sell the property.
- You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record, or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.
- To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.
- You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.
- If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.
If you have any questions you can call us at our office, 314-993-4285.