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Tax Tip of the Week | No. 287 | Municipal Tax Reform for Ohio January 28, 2015

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

Tax Tip of the Week | Jan 28, 2015 | No. 287 | Municipal Tax Reform for Ohio

After many years of effort…

Towards the end of 2014, the Ohio House and Senate finally passed House Bill 5. Governor Kasich has not yet signed the bill as of this writing, although he is expected to do so.

This bill will significantly reduce and simplify the filing of city tax returns.  There are over 600 municipalities in the state that collect city income taxes.  Over the years, each municipality created its own set of rules and regulations making this the most arcane tax system in America.  As CPAs, we can now focus on helping business owners in growing their business instead of dealing with the complexity of so many different sets of tax rules.

Note, however, that most of the provisions of the bill will not go into effect until January 1, 2016. Some other provisions of the bill will be implemented on January 1, 2017.  We will run another Tax Tip of the Week later this year to help you get ready for your 2016 city tax returns.

We congratulate The Ohio Society of CPAs in leading the effort for this significant change in municipal tax reform.

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.

Tax Tip of the Week | No. 286 | IRS Revises Standard Mileage Rates for 2015 January 21, 2015

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

Tax Tip of the Week | Jan 21, 2015 | No. 286 | IRS Revises Standard Mileage Rates for 2015

These rates started January 1, 2015

The IRS has increased the standard mileage rate for business purposes, but lowered the rate for medical or moving purposes.

–    Mileage rate for business purposes will be 57.5 cents/mile, up from 56 cents in 2014
–    Medical and moving rates will be 23 cents/mile, down half a cent from 2014
–    Charitable rate will remain unchanged at 14 cents/mile (Note: Congress sets the charitable rate and it has remained unchanged for many years)

With today’s decreasing gas prices, we wouldn’t be surprised if the IRS makes a mid-year correction as they have done in prior years.

We’ll keep you posted.

 

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.

Tax Tip of the Week | No. 285 | Ohio Employers’ Federal Unemployment Tax Increased for 2014 January 14, 2015

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

Tax Tip of the Week | Jan 14, 2015 | No. 285 | Ohio Employers’ Federal Unemployment Tax Increased for 2014

In case you didn’t hear…

The federal unemployment tax rate for employers increased for the fourth year for 2014 due to an automatic repayment system for states that haven’t repaid their debts.

This credit reduction results in additional tax on the first $7,000 of wages.  The additional federal tax is now up to 1.2% (up from .9% in 2013) and will cost employers an additional $84 per employee for 2014, an increase of $21 above 2013.  In all, the state’s lingering debt has cost Ohio businesses $558 million in added taxes the past three years.

Most Ohio employers pay both  state (SUTA) and federal (FUTA) unemployment tax. The federal portion is returned to the state to pay administrative costs, and the state tax pays benefits to unemployed workers. Without sufficient reserves when the recession hit, Ohio and 35 other states were forced to borrow from a federal trust fund to continue paying jobless benefits to unemployed workers.

Ohio began borrowing in 2009, and the state’s debt peaked at $2.6 billion.

According to the U. S. Department of Labor, most states have repaid the money.  Ohio is among nine states and the Virgin Islands that still owe nearly $13.2 billion combined.

Despite the rising federal tax, Ohio state tax rate is dropping.  That’s because state law specifies that as the economy improves, the state tax must be reduced.

Don’t you love tax laws?!

 

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.

Tax Tip of the Week | No. 284 | Tax Extenders Passed January 7, 2015

Posted by bradstreetblogger in : General, Section 168, Section 179, tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | Jan 7, 2015 | No. 284 | Tax Extenders Passed

In case you didn’t hear…

Just before Christmas, Congress finally passed the “tax extenders” for 2014. These “extenders” refer to a set of about 60 tax incentives that are scheduled to lapse after a certain number of years.  We have seen Congress act at the last minute three times in the past:  October 2008, December 2010 and January 2013.

Perhaps Finance Chairman Ron Wyden (D-, Oregon) said it best: “Congress is turning in its tax homework eleven-and-a-half months late and expects to earn full credit”.

In any event, we now know for sure that we can use the following popular tax breaks when preparing your 2014 tax return:

–    Section 179-businesses can elect to immediately deduct up to $500,000 for equipment purchases vs. depreciating over a number of years
–    Bonus Depreciation- allows businesses to claim an additional 50% first year depreciation on new equipment purchases
–    Teachers Classroom Expense Deduction- $250 maximum
–    Mortgage Insurance Premium Deduction (PMI)
–    Higher Education Deduction- $4,000 maximum
–    State and Local Sales Tax Deduction-in lieu of income tax deduction
–    Mortgage Debt Exclusion-if primary home is foreclosed
–    Charitable Distributions from IRAs –if over 70.5 years old
–    Charitable Deduction if making a Conservation Easement
–    Research Tax Credit
–    Work Opportunity Tax Credit
–    100% Exclusion for Gain on Qualified Small Business Stock

These are only some of the most commonly used tax incentives that were extended for 2014.  Also note that all of these incentives are subject to various rules and regulations.

Also be aware that Congress granted these extensions for 2014 only! Hopefully, we will not have to wait so long to know what the 2015 tax code will look like.

We’ll keep you posted.

 

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.