January 31 filing deadline for Forms W-2

The Internal Revenue Service today reminded employers and small businesses of a new Jan. 31 filing deadline for Forms W-2. The IRS must also hold some refunds until Feb. 15.

A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud, will accelerate the W-2 filing deadline for employers to Jan. 31. For similar reasons, the new law also requires the IRS to hold refunds involving two key refundable tax credits until at least Feb. 15. Here are details on each of these key dates.

New Jan. 31 Deadline for Employers
The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by Jan. 31. The new Jan. 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors.

Some Refunds Delayed Until at Least Feb. 15
Due to the PATH Act change, some people will get their refunds a little later. The new law requires the IRS to hold the refund for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. By law, the IRS must hold the entire refund, not just the portion related to the EITC or ACTC.

Courtesy of IRS

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

Seven Things Employers Can Think About Now

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.

1. 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.

2. ALEs must report information about themselves, the coverage they offered – if any – and the individuals covered under the policy.

3. 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.

4. ALEs that file 250 or more information returns during the calendar year must file the returns electronically.

5. 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.

6. 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.

7. The ACA Assurance Testing System opens 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.

Courtesy of IRS

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

Some Tax Benefits Increase Slightly Due to Inflation Adjustments

The Internal Revenue Service today announced the tax year 2017  annual inflation adjustments for more than 50 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2016-55 provides details about these annual adjustments. The tax year 2017 adjustments generally are used on tax returns filed in 2018.

• The standard deduction for married filing jointly rises to $12,700 for tax year 2017, up $100 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $6,350 in 2017, up from $6,300 in 2016, and for heads of households, the standard deduction will be $9,350 for tax year 2017, up from $9,300 for tax year 2016.
• The personal exemption for tax year 2017 remains as it was for 2016: $4,050.  However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $261,500 ($313,800 for married couples filing jointly). It phases out completely at $384,000 ($436,300 for married couples filing jointly.)
• For tax year 2017, the 39.6 percent tax rate affects single taxpayers whose income exceeds $418,400 ($470,700 for married taxpayers filing jointly), up from $415,050 and $466,950, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds for tax year 2017 are described in the revenue procedure.
• The limitation for itemized deductions to be claimed on tax year 2017 returns of individuals begins with incomes of $287,650 or more ($313,800 for married couples filing jointly).

Courtesy of IRS

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

Disaster Perparedness

The Internal Revenue Service today offered advice to taxpayers who may be affected by storms or other natural disasters. The IRS also reminded taxpayers that the agency is here to help including offering a special toll-free number to taxpayers in federally-declared disaster areas, staffed with IRS specialists trained to handle disaster-related issues.

Don’t Forget to Update Emergency Plans
Because a disaster can strike any time, be sure to review emergency plans annually. Personal and business situations change over time as do preparedness needs.

Create Electronic Copies of Key Documents
Taxpayers can help themselves by keeping a duplicate set of key documents including bank statements, tax returns, identifications and insurance policies in a safe place such as a waterproof container and away from the original set.

Document Valuables
It’s a good idea to photograph or videotape the contents of any home, especially items of higher value. Documenting these items ahead of time will make it easier to   quickly claim any available insurance and tax benefits after the disaster strikes

Check on Fiduciary Bonds
Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

In the case of a federally declared disaster, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.

Courtesy of IRS

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

Offshore Voluntary Compliance Efforts Top $10 Billion

As international compliance efforts pass several new milestones, the Internal Revenue Service reminds U.S. taxpayers with undisclosed offshore accounts that they should use existing paths to come into full compliance with their federal tax obligations.
Updated data shows 55,800 taxpayers have come into the Offshore Voluntary Disclosure Program (OVDP) to resolve their tax obligations, paying more than $9.9 billion in taxes, interest and penalties since 2009. In addition, another 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions and meet their federal tax obligations, paying approximately $450 million in taxes, interest and penalties.
“The IRS has passed several major milestones in our offshore efforts, collecting a combined $10 billion with 100,000 taxpayers coming back into compliance,” said IRS Commissioner John Koskinen. “As we continue to receive more information on foreign accounts, people’s ability to avoid detection becomes harder and harder. The IRS continues to urge those people with international tax issues to come forward to meet their tax obligations.”
Under the Foreign Account Tax Compliance Act (FATCA) and the network of inter-governmental agreements (IGAs) between the U.S. and partner jurisdictions, automatic third-party account reporting has entered its second year. More information also continues to come to the IRS as a result of the Department of Justice’s Swiss Bank Program. As part of a series on non-prosecution agreements, the participating banks continue to provide information on potential non-compliance by U.S. taxpayers.
OVDP offers taxpayers with undisclosed income from foreign financial accounts and assets an opportunity to get current with their tax returns and information reporting obligations. The program encourages taxpayers to voluntarily disclose foreign financial accounts and assets now rather than risk detection by the IRS at a later date and face more severe penalties and possible criminal prosecution.

Courtesy of IRS

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

Become a Tax Volunteer

The IRS is looking for people to provide free tax help in 2017. Become a tax volunteer and make a difference in your community.

The IRS sponsors the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. These two programs offer free tax help across the country for people with low-to-moderate incomes. This year, VITA and TCE volunteers prepared more than 3.7 million federal tax returns at no cost to families across the country.

As a volunteer, you’ll join a program that’s helped millions of people file tax returns at no charge for more than 40 years. Your help will make a difference. It’s people helping people. It's that simple.

Courtesy of IRS

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

When should I hire an Accountant?

There are good reasons for hiring an accountant at different stages of your company's growth. From a business plan to company formation, loan application to government audit, an accountant can make life easier for you at each step.

That doesn't mean you always need to employ an accountant full-time or hire one on a retainer basis. Sometimes just a couple of hours of their time will be enough.

Like all small business owners who are looking to save money, you may think you can’t afford an accountant. But look at how long it would take you to do certain tasks (such as taxes), and ask yourself, is that a good use of your time?

If you involve an accountant while you're writing your business plan, they will be able to use accounting software to add financial projections and other reports to it. This will help you create a business plan that's realistic, professional and more likely to succeed.

Not all businesses have the same legal structure – there are different types that are determined by a number of factors. Some might be called limited companies, limited liability partnerships or corporations, others could be sole traders or proprietors. These vary from one country to another.
You should carefully consider each type before deciding which one best suits you.

Small business accounting can quickly become complex if you do it on your own. If you feel you're losing control of who owes you money and how much, an accountant can help you get back on track.

You may also want to measure key business metrics, such as the ratio of salaries and other employee payments to total revenue. An accountant can help here by managing your payroll and producing graphs so you can see how the ratio changes over time.

As a small business owner, no doubt one of the things you like best is that you have control. You can set your own working hours, craft your business strategy, regulate your workload (at least to some extent) and determine your own finances. And being the master of all of these things is a wonderful and liberating feeling.

But sometimes it can stop you from delegating. Business owners can feel overworked, partly due to a reluctance to allow other people to help out. You might feel that no one can possibly know your business as well as you do, therefore nobody can handle any part of your business as well as you can.

Inability to delegate can mean you’re left feeling overworked and stressed. At some point you will have to let go, and learn to trust other people to handle some parts of your business so that you can look after the rest.

Courtesy of Xero

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