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Tax Tip of the Week | No. 226 | Year End Tax Planning November 27, 2013

Posted by bradstreetblogger in : Tax Planning Tips, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | November 27, 2013 | No. 226 | Year End Tax Planning

 

This is the time of year in our CPA practice that we work with small business owners and individuals to perform tax checkups to help them project their tax liabilities for 2013 and make tax saving recommendations of moves that they can make between now and year-end. Frequently, just defining the amount of taxes they owe via these planning services helps manage their cash flow so the businesses and individuals don’t have a big amount due and/or surprise each spring when we prepare their tax returns.

For the business owner and individuals, one of the largest expenses can be taxes.  For this reason alone, this expenditure requires planning and monitoring as any other major expense.  A year end planning meeting with your CPA should include a discussion of:

•any assets purchased during the year

•anticipated year-end revenues and expenses

•plans for current year retirement funding

•any refinancing of debt that occurred in the current year

•any changes to your business structure

This planning meeting should prepare the business owner or individuals to anticipate the amount of taxes that will be owed on March 15th (or April 15th if the tax burden flows through to the personal return).  To be effective, tax planning needs to be done prior to New Year’s Eve.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Gratuity Included? | Tax Tip of the Week | No. 225 November 20, 2013

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We May Soon See An End To The “18% Gratuity Added” on menus–

That 18% service charge received for parties of eight or more will soon become taxable as wages subject to payroll taxes for food servers across the nation. Until now, these service charges were considered tips, and it was left to the wait staff to report them as income.

Restaurants were given until January 2014 to comply with Rev. Rul. 2012-26, and time is up soon.

The revenue ruling provides that the absence of any of the following factors indicates that the payment may be a service charge:

•The payment must be made free from compulsion;

•The customer must have the unrestricted right to

determine the amount;

•The payment should not be the subject of negotiation

or dictated by employer policy; and, generally,

•The customer has the right to determine who

receives the payment.

Since service charges are not eligible for the business owner to take the tip credit claimed on Form 8846 and are not eligible for the general business credit claimed on Form 3800, it is expected that the chain restaurants will eliminate these automatic gratuities. In order to compete with the big boys, the smaller restaurants most likely will follow suit.

Let us know if you see these changes occur at your favorite restaurants in 2014.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

 

Using FSA’s Just Got Easier November 13, 2013

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Tax Tip of the Week | November 13, 2013 | No. 224 | Using FSA’s Just Got Easier

This Change May Occur As Soon As 2013

The Treasury Department and the Internal Revenue Service have loosened the “use it or lose it” rule for flexible spending arrangements for health care, allowing participants in health benefit plans to carry over up to $500 from their FSA from year to year.

The goal is to make health FSAs more consumer-friendly and provide added flexibility. As part of the Affordable Care Act, the federal government limited the amount of money that could be put into an FSA to $2,500 a year and the new rule would encourage a greater number of workers, particularly low- and moderate-income taxpayers, to take advantage of FSAs without worrying that they will lose the money they put into the accounts.

However, it will be up to the employer to decide whether or not to offer this option to employees. Most employers have traditionally been able to hold onto any money left by employees in their FSA accounts.

This guidance permits employers to now allow employees to carry over up to $500 of the unused amounts left in their health FSAs for expenses in the next year. Some plan sponsors may be eligible to take advantage of the option to adopt a carryover provision as early as plan year 2013. In addition, the existing option for plan sponsors to allow employees a grace period after the end of the plan year remains in place. However, a health FSA cannot have both a carryover and a grace period: it can have one or the other or neither.

The modification does not affect another provision of the Affordable Care Act restricting the use of health spending accounts, or HSAs, for buying over-the-counter drugs and other health care items without a doctor’s prescription.

Notice 2013-71 explains the modification in greater detail. There is also a fact sheet on the modified rules from the Treasury Department.

Be sure to check how your employer will implement this benefit change.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

 

New Rules on Getting Replacement SSN Cards November 6, 2013

Posted by bradstreetblogger in : tax changes, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | November 6, 2013 | No. 223 | New Rules on Getting Replacement SSN Cards

SSN Printouts and Replacement Cards

The Social Security Administration’s (SSA) requirements for issuing social security number (SSN) printouts are less stringent than the requirements for issuing replacement SSN cards.

Since SSN printouts have no physical security features, it is easier to counterfeit them, perpetrate SSN misuse and commit identity theft. To resolve this problem, beginning June 24, 2013, if you are applying for a replacement social security card, or simply asking for a printout of your social security numbers, you will need to provide SSA with proof of identity.

Review Getting a Social Security Card for more information on the documents now required to obtain an SSN replacement card or printout.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.