News & Guidance.
Understanding accounting rules and tax law is no easy task. As recent legislation shows, the law is always changing too! The information below is designed to serve as a quick reference tool, not accounting or tax guidance.
If you have questions concerning any of the information below, we suggest you call our office.
IRS Limitation Changes For 2019
The IRS has released various rates and limitations for 2019 that you might find helpful. (READ MORE)
Understanding the new tax law is no easy task
As of January 1, 2018, the most significant changes to tax law in the past 30 years went into effect. Known as the Tax Cuts and Jobs Act (TCJA) Law, this law provides sweeping changes to how businesses and individuals are taxed.
As of January 1, 2018, the most significant changes to tax law in the past 30 years went into effect. Known as the Tax Cuts and Jobs Act (TCJA) Law, this law provides sweeping changes to how businesses and individuals are taxed. The list below provides a brief summary of some of the most significant changes that you should be aware of.
- All tax brackets have been lowered by 2-3% with the highest tax bracket reduced from 39.6% to 37%.
- While it is a positive that Itemized Deductions are almost doubling, what is deductible is significantly changing.The deduction for State and Local income taxes, as well as property taxes are now limited to $10,000. Many individuals who had significant deductions in this area will be limited and may not qualify to itemize as a result.
- Personal exemptions are no longer a reduction in taxable income.In fact, the TCJA has eliminated exemptions all together. For families with children, and more critically families with multiple children, this results a significant lost deduction.
- Charitable donations are now limited to 60% of Adjusted Gross Income.
- Miscellaneous itemized deductions, such as accounting fees, investment management fees, and unreimbursed business expenses are no longer deductible.The loss of unreimbursed business expenses could be substantial for employees who travel substantially but are not reimbursed for mileage.
- Historically, alimony could be a deduction depending on specifics within the agreement.For eligible alimony for a divorce decree executed before December 31, 2018, alimony will still be deductible. Any divorce decree signed January 1, 2019 or later will not allow under any circumstances a deduction for alimony.
- Child Tax credits are increasing and a new Family Credit is now available for dependents who might not be a qualified child.
- You can access information from the IRS here (https://www.irs.gov/pub/irs-pdf/p5307.pdf)
- A new ceiling on the tax rates for C Corporations is in effect lowering income tax for these businesses from 35% to 21%.
- C Corporations that might have prior net operating losses (NOLs) are now limited to using up to 80% of an NOL as an offset to current year income.
- A significant and complex change to pass-through entities (Subchapter S corporations and Partnerships) and Real-Estate Investment Trusts (REIT) known as Section 199A allows owners of these entities to deduct 20% of income on their personal returns. This new law is not a benefit to all pass-through entities however as there are rules regarding the type of entity (Specified service trade or business (aka SSTB)) and the basis of which the deduction is calculated (Qualified Business Income (aka QBI)). The amount of income a taxpayer reports on their personal tax return also impacts what is deductible by the owners of these entities.
- Valid business meals are still deductible up to 50% of cost, but general recreation or entertainment expenses are no longer deductible, even if they are ordinary and necessary for business.
Please reach out to us for more information on these changes and how you may be impacted.
Ten Things Taxpayers Should Think About When Choosing a Tax Preparer
It’s the time of the year when many taxpayers choose a tax preparer to help file a tax return. These taxpayers should choose their tax return preparer wisely. This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.
Here are ten tips for taxpayers to remember when selecting a preparer:
- Check the Preparer’s Qualifications. People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.
- Check the Preparer’s History. Taxpayers can ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, people can check with the State Board of Accountancy. For attorneys, they can check with the State Bar Association. For Enrolled Agents, taxpayers can go to the verify enrolled agent status page on IRS.gov or check the directory.
- Ask about Service Fees. People should avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When asking about a preparer’s services and fees, don’t give them tax documents, Social Security numbers or other information.
- Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 15 due date. People should avoid fly-by-night preparers or preparers who “take the summer off” or close their office off season. It will be difficult to obtain answers or address an issue if your tax preparer is not available.
- Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits. They will provide suggestions to minimize your tax burden or improve your record keeping efficiency.
- Review Before Signing. Before signing a tax return, the taxpayer should review it. They should ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. The taxpayer should review the routing and bank account number on the completed return. The preparer should give you a copy of the completed tax return. If a tax preparer is unwilling to answer questions, stop and do not sign your return.
- Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns and include their PTIN.
- Never Sign a Blank Return. Taxpayers should not use a tax preparer who asks them to sign a blank tax form.
Adapted from the IRS website
Is it possible that you could have unclaimed funds?
Many organizations are required by law to report dormant accounts to the State Comptroller. In addition, organizations are then required to notify you by mail and publish information in newspapers. Despite such efforts, funds still remain unclaimed and are then turned over to the Office of the State Comptroller.
Types of Unclaimed Funds Accounts Include:
• Bank Accounts – savings, checking and CDs
• Court Funds
• Estate Proceeds
• Insurance Benefits/Policies
• Stocks, Bonds, Mutual Funds
• Telephone/Utility/Security Deposits
It is important to be cautious of people who are pretending to be the government, who offer to send you any type of money in exchange for a fee, or any type of personal information whether it be via e-mail or through a link to a fraudulent Website.
Use this link to find out if you have any unclaimed funds waiting for you:
Credit Card Surcharges
In October 2018, the New York State Court of Appeals rules that New York State Merchant Businesses can legally pass on their credit card processing fees to their credit card customer and still comply with the New York's General Business Law Section 518, as ong as they disclose the dollar and cents price charged to the credit card customer. They must comply with each of the credit card companies requirements and consumer diclosure guidelines.
The credit card surcharge cannot exceed the Merchant Businesses discount rate up to a maximum of 4%. A credit card sucharge can never be charged on a pre-paid card or debit card.
There are two ways that a Merchant Business can legally pass on the processing fees to the credit card customer is through a "credit card surcharge" and a "cash discount".
A "credit card surcharge" is an "additional fee" that a Merchant Business adds to the cunsumer bills when a credit card is used for payment. The process for implementing a credit card surcharge include three steps, These steps and more informtion can be found here. New York State dictates posting two prices on each item or service: the credit card price with the surcharge and the cas/debit card price without the surcharge.
A "cash discount" occurs when a Merchant Business "post credit card prices" and offers a "discount" on those prices for customers who pay with cash. The difference with a credit card surcharge is that the "surcharge" occurs when a merchant "post cash prices" and charges an additional fee on top of that price for customers who pay with a card.
For more information, contact us at 518.270.9243.