Students Working this Summer

Many students get summer jobs. It’s a great way to earn extra spending money or to save for later. Here are some topics you might need help with:
1. Withholding and Estimated Tax.
2. New Employees.
3. Self-Employment.
4. Tip Income.
5. Payroll Taxes.
6. Newspaper Carriers.
7. ROTC Pay.
8. Use IRS Free File.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

HIRE Act Update from Neikirk, Mahoney & Smith

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.

Retirees Face April 1 Deadline

Many Retirees Face April 1 Deadline to Take Required Retirement Plan Distributions
IR-2015-55, March 19, 2015 — The IRS today reminded taxpayers who turned 70½ during 2014 that in most cases they must start receiving required minimum distributions from Individual Retirement Accounts and workplace retirement plans by Wednesday, April 1, 2015.

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

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.

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