Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).
The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.
In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.
If you have questions, contact Neikirk, Mahoney & Smith CPAs at 502-896-2999.
Showing posts with label Tax News. Show all posts
Showing posts with label Tax News. Show all posts
Friday, September 11, 2015
Thursday, March 26, 2015
Yes, Virginia, it IS taking longer to do your taxes this year:-)
Tax season is supposed to be over on April 15. But among certain groups—especially the wealthy—filing for an extension until Oct. 15 is now routine, according to Bloomberg Business and Neikirk, Mahoney & Smith CPAs.
In 2011, 11 million taxpayers filed for an extension; two years later, 13 million did, an increase of almost 20 percent. At the end of September 2014, more than 25 percent of those who had filed for an extension were still working on their filings. We're not just procrastinators. It has gotten harder to file on time. Here’s why:
1. You don't have the forms you need.
The more complicated your investments, the more likely it is that you won't have everything you need to file your taxes by April 15. Often, private equity, venture capital, and hedge funds are structured as partnerships, which means their earnings generate so-called “Schedule K-1” forms, which sometimes take until late summer to arrive.
Christine Freeland, a certified public accountant in Chandler, Ariz., says brokers are putting more of her clients in energy or real estate partnerships instead of (or in addition to) mutual funds, which means more K-1s. Some clients don't even know how many K-1s they'll be getting, she says, and they think their return is ready until they receive an additional K-1 in the mail. Sometimes the partnerships—which have to finish their own returns before they can issue K-1 forms—get extensions, although they must file by Sept. 15.
Simpler investments that generate 1099 forms can slow down the process, too. Brokerage statements have to be out by Feb. 15, but many note that the information may not be final. One of Freeland's clients once handed her a corrected brokerage statement that hadn't arrived until April 15.
2. You're waiting on other people.
The more middlemen standing between you and your tax forms, the greater the chances of delay. According to Bill Zatorski of accounting firm PwC, a common sticking point for wealthy taxpayers is data from funds of funds, hedge funds that invest in hedge funds. A fund of funds can’t send you a K-1 until it receives K-1s, or other needed forms, from all the various funds it holds.
Adding to the delay, says Kevin Meehan of Wealth Enhancement Group, is that investors rarely hold funds or other investments directly. Everything gets funneled through brokerages. You wait for your brokerage, which is waiting for your fund-of-funds, which is awaiting forms for all the funds it holds. An extension until Oct. 15 is only a partial solution for taxpayers with late tax forms: They still must pay an estimate of what they owe by April 15, even if the full return comes later.
3. The tax code is more complicated.
If all else fails, blame Congress. Taxpayers already must follow different rules for wages, capital gains, and two types of dividends—those that get taxed at a lower tax rate and those that don’t meet the “qualified” criteria. In 2013, yet another tax category was added, a 3.8 percent net investment income tax on married couples earning more than $250,000 per year.
Under a 2010 law, taxpayers also now must report all their overseas holdings—a process that sometimes requires the close reading of K-1 footnotes, Zatorski says. Finally, there’s the alternative minimum tax, or AMT, a parallel tax system designed to limit the deductions that wealthier Americans can take. Plenty of those affected aren’t particularly wealthy. About 4.2 million people were ensnared by the AMT in 2014, the Tax Policy Center estimates, up 8 percent from the year before. The AMT alone can almost double how long it takes to fill out a tax return, the National Taxpayer Advocate says.
In 2011, 11 million taxpayers filed for an extension; two years later, 13 million did, an increase of almost 20 percent. At the end of September 2014, more than 25 percent of those who had filed for an extension were still working on their filings. We're not just procrastinators. It has gotten harder to file on time. Here’s why:
1. You don't have the forms you need.
The more complicated your investments, the more likely it is that you won't have everything you need to file your taxes by April 15. Often, private equity, venture capital, and hedge funds are structured as partnerships, which means their earnings generate so-called “Schedule K-1” forms, which sometimes take until late summer to arrive.
Christine Freeland, a certified public accountant in Chandler, Ariz., says brokers are putting more of her clients in energy or real estate partnerships instead of (or in addition to) mutual funds, which means more K-1s. Some clients don't even know how many K-1s they'll be getting, she says, and they think their return is ready until they receive an additional K-1 in the mail. Sometimes the partnerships—which have to finish their own returns before they can issue K-1 forms—get extensions, although they must file by Sept. 15.
Simpler investments that generate 1099 forms can slow down the process, too. Brokerage statements have to be out by Feb. 15, but many note that the information may not be final. One of Freeland's clients once handed her a corrected brokerage statement that hadn't arrived until April 15.
2. You're waiting on other people.
The more middlemen standing between you and your tax forms, the greater the chances of delay. According to Bill Zatorski of accounting firm PwC, a common sticking point for wealthy taxpayers is data from funds of funds, hedge funds that invest in hedge funds. A fund of funds can’t send you a K-1 until it receives K-1s, or other needed forms, from all the various funds it holds.
Adding to the delay, says Kevin Meehan of Wealth Enhancement Group, is that investors rarely hold funds or other investments directly. Everything gets funneled through brokerages. You wait for your brokerage, which is waiting for your fund-of-funds, which is awaiting forms for all the funds it holds. An extension until Oct. 15 is only a partial solution for taxpayers with late tax forms: They still must pay an estimate of what they owe by April 15, even if the full return comes later.
3. The tax code is more complicated.
If all else fails, blame Congress. Taxpayers already must follow different rules for wages, capital gains, and two types of dividends—those that get taxed at a lower tax rate and those that don’t meet the “qualified” criteria. In 2013, yet another tax category was added, a 3.8 percent net investment income tax on married couples earning more than $250,000 per year.
Under a 2010 law, taxpayers also now must report all their overseas holdings—a process that sometimes requires the close reading of K-1 footnotes, Zatorski says. Finally, there’s the alternative minimum tax, or AMT, a parallel tax system designed to limit the deductions that wealthier Americans can take. Plenty of those affected aren’t particularly wealthy. About 4.2 million people were ensnared by the AMT in 2014, the Tax Policy Center estimates, up 8 percent from the year before. The AMT alone can almost double how long it takes to fill out a tax return, the National Taxpayer Advocate says.
Tuesday, October 28, 2014
Conservative Groups' Lawsuits Against IRS Dismissed
A federal judge has dismissed a pair of lawsuits against the Internal Revenue Service by over 40 conservative groups over the IRS’s handling of their applications for tax-exempt status, according to Michael Cohn in Accounting Today.
Judge Reggie Walton of the U.S. District Court in Washington pointed out in his ruling Thursday that the IRS had changed the way it reviewed the tax-exempt applications and had approved most of the groups, and that federal courts do not allow financial claims against individual defendants in the IRS for constitutional violations.
The lawsuits were filed on behalf of conservative groups such as True the Vote and Linchpins of Liberty by the American Center for Law and Justice.
The IRS has come under fire from conservative groups since last year for using terms such as “Tea Party” and “Patriot” to review applications for tax-exempt status under Section 501(c)4 of the Tax Code. The controversy led to the ouster of the former director of the IRS’s Exempt Organizations unit, Lois Lerner, along with other IRS officials.
The head of at least one conservative organization was dismayed by the dismissal of the lawsuits. “This ruling is offensive to every citizen who believes in equal treatment under the law,” said FreedomWorks executive vice president Adam Brandon in a statement. “It doesn't matter when the IRS bullied conservative groups or if they stopped, the point is that it was done, and the IRS has to be held accountable. Today's decision was the legalization of federal bullying and unchecked discretionary authority, so long as agencies can play the waiting game long enough to correct their misdeeds. The fact that it occurred in the first place was appalling, but the fact that it was excused by the courts was disgraceful."
If you - or someone you know - is considering a filing for tax-exempt status, contact Neikirk, Mahoney & Smith. Neikirk, Mahoney & Smith's tax experts can help you streamline the process and maximize the chances for a prompt approval from the Internal Revenue Service.
If you - or someone you know - is considering a filing for tax-exempt status, contact Neikirk, Mahoney & Smith. Neikirk, Mahoney & Smith's tax experts can help you streamline the process and maximize the chances for a prompt approval from the Internal Revenue Service.
Wednesday, March 12, 2014
Tax-Credit Plan Refocuses Poverty Debate
(Bloomberg) Policy makers on both sides of the partisan divide, from Treasury Secretary Jacob J. Lew to Mitt Romney’s economic adviser Glenn Hubbard, favor expanding the Earned Income Tax Credit. This rare harmony holds the potential to reshape the debate on bridging the growing opportunity gap.
“The dynamics surrounding EITC are changing,” said Alex Brill, a researcher at the American Enterprise Institute, referring to the refundable tax credit for low-income workers. “There’s a little bit of a shift among conservatives and Republicans—an increased level of interest in issues around the working poor.”
Wednesday, August 14, 2013
Tax News From Around the Nation
Spiraling National Debt - First Detroit, Who's Next?
Glenn Hubbard and Tim Kane opined in the New York Times that both political parties have misjudged the effect of the nation's spiraling debt will have on near term growth and long term national security. Read more.
Group Advocating Tax-free Savings Accounts for Home Buyers
A coalition that includes real estate developers and investors has been floating the idea of IRA-ish tax free savings plans as part of a package of reforms intended to overhaul federally funded real estate programs. Read more.
Proposals to Eliminate the Cap on OASDI Unlikely to Pass, WSJ Says
There is a limit on the amount of earnings subject to Social Security's "Old-Age, Survivors and Disability Insurance" program, known as "OASDI" for short and proposals to either eliminate or increase it sharply, have little chance of passing through Congress in today's economic climate.
For 2013, that limit is $113,700, up from $110,100 in 2012. The increase reflected changes in a national average wage index. For more details, see the Social Security Administration's website (ssa.gov).
There is no limit on the amount subject to Medicare taxes. Starting this year, many upper-income taxpayers have to pay an additional Medicare tax of 0.9% on earned income exceeding a certain amount. The threshold generally is $200,000, or $250,000 for joint returns.
If you work for two or more employers during a year, make sure to keep track of the total amount of Social Security tax that was withheld from your pay. Check to see whether you paid more than you owed. (IRS Publication 17 has details.) If so, you can claim the excess amount as a credit against your federal income tax.
IRS Sends Threatening Letter to Approximately 20,000 Employers
According to Accounting Today, the Internal Revenue Service has sent threatening letters to some 20,000 employers accusing them of possible income underreporting based on reports it has received on their debit and credit card transactions.
And House Small Business Committee chairman Sam Graves, R-Mo., has written a letter to the Internal Revenue Service complaining about it.
“We have heard from tax practitioners whose clients are small business owners who have received letters from the IRS titled Notification of Possible Income Underreporting,” he wrote to Faris Fink, the commissioner of the IRS’s Small Business/Self-Employed Division, in a letter last Friday.
“First, although my staff met with you and your team, you assured us that the IRS is merely seeking additional information, the initial sentence of the notification letter begins, ‘Your gross receipts may have been underreported.’ This gives the impression that the IRS is looking for more than just additional information. To the contrary, the letter implies that this is a serious matter that could lead to assessments of additional tax, penalties and interest.” Read more
If you'd like to speak with one of our accounting professionals, please call us at 502-896-2999 or visit our website at http://nmscpas.com
Glenn Hubbard and Tim Kane opined in the New York Times that both political parties have misjudged the effect of the nation's spiraling debt will have on near term growth and long term national security. Read more.
Group Advocating Tax-free Savings Accounts for Home Buyers
A coalition that includes real estate developers and investors has been floating the idea of IRA-ish tax free savings plans as part of a package of reforms intended to overhaul federally funded real estate programs. Read more.
Proposals to Eliminate the Cap on OASDI Unlikely to Pass, WSJ Says
There is a limit on the amount of earnings subject to Social Security's "Old-Age, Survivors and Disability Insurance" program, known as "OASDI" for short and proposals to either eliminate or increase it sharply, have little chance of passing through Congress in today's economic climate.
For 2013, that limit is $113,700, up from $110,100 in 2012. The increase reflected changes in a national average wage index. For more details, see the Social Security Administration's website (ssa.gov).
There is no limit on the amount subject to Medicare taxes. Starting this year, many upper-income taxpayers have to pay an additional Medicare tax of 0.9% on earned income exceeding a certain amount. The threshold generally is $200,000, or $250,000 for joint returns.
If you work for two or more employers during a year, make sure to keep track of the total amount of Social Security tax that was withheld from your pay. Check to see whether you paid more than you owed. (IRS Publication 17 has details.) If so, you can claim the excess amount as a credit against your federal income tax.
IRS Sends Threatening Letter to Approximately 20,000 Employers
According to Accounting Today, the Internal Revenue Service has sent threatening letters to some 20,000 employers accusing them of possible income underreporting based on reports it has received on their debit and credit card transactions.
And House Small Business Committee chairman Sam Graves, R-Mo., has written a letter to the Internal Revenue Service complaining about it.
“We have heard from tax practitioners whose clients are small business owners who have received letters from the IRS titled Notification of Possible Income Underreporting,” he wrote to Faris Fink, the commissioner of the IRS’s Small Business/Self-Employed Division, in a letter last Friday.
“First, although my staff met with you and your team, you assured us that the IRS is merely seeking additional information, the initial sentence of the notification letter begins, ‘Your gross receipts may have been underreported.’ This gives the impression that the IRS is looking for more than just additional information. To the contrary, the letter implies that this is a serious matter that could lead to assessments of additional tax, penalties and interest.” Read more
Innocent Spouses Given More Time to File
On Monday, the IRS issued a new regulation that proposes to expand from two to 10 years the amount of time that taxpayers could apply for innocent spouse relief so they are no longer responsible for the tax debts of estranged spouses. Read more.
Married Same Sex Couples Likely to See Tax Increase
The increase probably would result from phasing out income tax credits for families, depending on the distribution of income between two working spouses, now that same-sex couples will be required to file joint returns with the Internal Revenue Service, according to a Congressional Research Service report.
On Monday, the IRS issued a new regulation that proposes to expand from two to 10 years the amount of time that taxpayers could apply for innocent spouse relief so they are no longer responsible for the tax debts of estranged spouses. Read more.
Married Same Sex Couples Likely to See Tax Increase
The increase probably would result from phasing out income tax credits for families, depending on the distribution of income between two working spouses, now that same-sex couples will be required to file joint returns with the Internal Revenue Service, according to a Congressional Research Service report.
If you'd like to speak with one of our accounting professionals, please call us at 502-896-2999 or visit our website at http://nmscpas.com
Monday, June 17, 2013
FASB, AICPA Partner to Simplify Accounting for Small Businesses
The American Institute of Certified Public Accountants and the Financial Accounting Standards Board, trade groups that manage and supervise standards used in the accounting profession, has announced that it is has created a “framework” that would simplify accounting for such companies. It would differ from the “generally accepted accounting principles,” or GAAP, that public companies must follow in a number of ways, large and small.
The goal is to make accounting-related life for small businesses (companies that are not publicly traded) easier to manage. Click here to read more
The goal is to make accounting-related life for small businesses (companies that are not publicly traded) easier to manage. Click here to read more
Monday, March 5, 2012
2012 Tax Notes
- IRS issues 2012 automobile depreciation limitations
The Internal Revenue Service on Friday released the 2012 inflation-adjusted depreciation limits and lease income inclusion amounts for passenger automobiles, trucks and vans. The 2012 tables include amounts for vehicles placed in service in 2012 for which bonus depreciation applies as well as limits for those for which bonus depreciation does not apply.JournalofAccountancy.com
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