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Tax Tip of the Week | No. 335 | Happy New Year! December 30, 2015

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

Tax Tip of the Week | December 30, 2015 | No. 335 | Happy New Year!

And get ready for the tax filing season.

Hopefully, you followed some of the suggestions we outlined a couple of years ago in TTW # 21 to organize your records. If you did, great!  This will make filing your tax returns a lot easier this year.  It also means that you and your tax advisor can spend more time on tax and financial planning issues for 2016 vs. looking back to 2015.

If you are new to our Tax Tip of the Week series, or didn’t follow our suggestions from a few years ago, now would be a good time to review TTW #21.   You might want to make getting organized your 2016 New Year’s Resolution!

This week we will look at some of the more common forms that you should be watching for in the coming weeks and months:

W-2:                  Employers should mail these by 1/31/16.  If you have moved during the year, make sure former employers are aware of your new address.

W-2G:               Casinos, Lottery Commissions and other gambling entities should mail these by 1/31/16 if you have gambling winnings above a certain threshold. Note:  Some casinos will issue you a W-2G at the time you win a jackpot.  Make sure you have saved those throughout the year.

1096:                Compilation sheet that shows the totals of the information returns that you are physically mailing to the IRS. The check box for Form 1099-H was removed from line 6, while a check box for Form 1098-Q was added to line 6. The spacing for all check boxes on line 6 was expanded. The amounts reported in Box 13 of Form 1099-INT should now be included in box 5 of Form 1096 when filing Form 1099-INT to the IRS.

1098-C :           This form is for contributions of motor vehicles, boats, and airplanes. A donee organization must file a separate Form 1098-C with the IRS for each contribution of a qualified vehicle that has a claimed value of more than $500. All filers of this form may truncate a donor’s identification number (social security number, individual taxpayer identification number, adoption taxpayer identification number, or employer identification number), on written acknowledgements. Truncation is not allowed, however, on any documents the filer files with the IRS.

1099-MISC :     This form reports the total paid during the year to a single person or entity for services provided. Certain Medicaid waiver payments may be excludable from the income as difficulty of care payments.  A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement.

1099-INT:         This form is used to report interest income from banks and other financial institutions. Box 13 was added to report bond premium on tax-exempt bonds. All later boxes were renumbered.  A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement.

1099-DIV:         This form is issued to those who have received dividends from stocks. A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement.

1099-B:             This form is issued by a broker or barter exchange that summarizes the proceeds of transactions. For a sale of debt instrument that is a wash sale and has accrued market discount, enter code “W” in box 1f and the amount of the wash sale loss disallowed in box 1g.

1099-K:             This form is given to those merchants accepting payment card transactions.  Completion of box 1b (Card Not Present transactions) is now mandatory for 2015.

K-1s:                  If you are a partner in a business or a limited partner in some investments, your income and expenses will be reported to you on a K-1.  The tax returns for these entities are not due until 4/18/16 (if they have a calendar-year accounting). Sometimes, you may not receive a K-1 until shortly after the entities’ tax return is filed in April.

If you are a beneficiary of an estate or trust, your share of the income and expenses for the year will also be reported on a K-1. The timing of when you may receive your K-1 is the same as outlined above.

NOTE:  Many times partnerships, estates and trusts will put their tax returns on extension. If they do, the due date of the return is not until 9/15/16.  We often see client’s receiving K-1s in the third week of September.

If you receive, or expect to receive, a K-1 it may be best if you place your personal return on extension.  It is a lot easier to extend your return then it is to amend your return after receiving a K-1 late in the year.

So start watching your mailbox and put all of these statements you receive in that new file you created!

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. 334 | Special Holiday Edition December 23, 2015

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Tax Tip of the Week | December 23, 2015 | No. 334 | Special Holiday Edition

Enjoy the Holidays!

We are going to take a break from tax planning this week. Instead, the family of Bradstreet & Company would like to wish you and your family the most joyous holiday season and best wishes for 2016.

We hope you have enjoyed the Tax Tip of The Week this year.  Please let us know what topics you would like us to cover as we enter the New Year.

Is the Tax Tip of the Week real?

While your kids are questioning if Santa is real, we continue to receive some interesting feedback that some of you don’t realize this is really Bradstreet CPAs reaching out each week (… some suspect this is a “packaged” communication to which we add our logo.) Well, rest assured it’s us and we’d love to hear from you.

Enjoy the week and, “Yes Virgina, there is a Santa Claus”.

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. 333 | IRS Abandons Traditional Independent Contractor vs. Employee Test December 16, 2015

Posted by bradstreetblogger in : Deductions, General, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes , add a comment

Tax Tip of the Week | December 16, 2015 | No. 333 | IRS Abandons Traditional Independent Contractor vs. Employee Test

For years, it has always been a struggle to determine whether a worker is an employee or an independent contractor. Now that some employers are required to offer health insurance under the Affordable Care Act, the bias among employers will be to treat as many workers as possible as independent contractors.

The IRS has given up its long used 20-factor test, replacing it with a 3-factor test it has been pushing in court cases. The previous test included the extent to which workers provided their own tools and supplies, provided services only for that firm vs. working for others, how and when their work was performed, and other factors.

The IRS fact sheet now states that instead of the 20 factors, businesses and other entities should examine the degree of control and independence in three categories:

1.    Behavioral. Does the business control or have the right to control what the worker does and how the worker does the job?
2.    Financial. Are the business aspects of the worker’s tasks controlled by the business —how the worker is paid, whether expenses are reimbursed, who provides tools and supplies, etc.?
3.    Relational. Is there a contract in writing? Is the work performed a key aspect of the business? Are these workers given employee-type benefits—e.g., vacation pay, a pension plan or medical insurance? Will the work relationship continue?

Some tax advisors say the change is little more than a different way of applying the same tests. Others say the three-category test will result in fewer workers being considered ICs. Give us a call to discuss your situation.

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. 332 | NSA Blasts Congress on IRS Cuts December 9, 2015

Posted by bradstreetblogger in : Business consulting, Tax Tip , add a comment

Tax Tip of the Week | December 9, 2015 | No. 332 | NSA Blasts Congress on IRS Cuts

We thought you might be interested in this article we read recently……

The National Society of Accountants has delivered what it calls “a strongly worded letter” to the chairs and ranking members of the Appropriations Committees of the U.S. Senate and House of Representatives criticizing them for slashing the IRS budget by hundreds of millions of dollars.

According to the NSA, a House bill calls for an $838 million cut in 2016 from the 2015 budget of $10.9 billion, which is also $2.8 billion less than President Obama’s 2016 budget request. A Senate bill proposes a cut of $470 million.

“Individual and small-business taxpayers are being harmed by IRS budget cuts on a daily basis,” NSA executive vice president John Ams wrote. “They are desperate for the kind of help and guidance that only the IRS can provide, but for which the agency has little or no budgeted funds.” He added that these cuts continue a multi-year trend of declining budgets for the IRS.

The IRS Taxpayer Advocate found that in 2014, 35.6 percent of phone calls went unanswered by IRS customer service representatives, NSA added, and half of written correspondence was “not handled in a timely manner.”

The NSA letter expressed support for a November 9 letter signed by five former IRS commissioners sent to these same Congressional leaders. “If you truly believe, as you state, that, ‘We need the IRS to enforce tax laws, stop and prevent fraud, prepare forms and instructions, process refunds, collect revenue and assist taxpayers in complying with tax obligations,’ then the first step would be to develop a budget for the IRS that would actually provide the agency the means with which to do so,” NSA president Kathy Hettick concluded.

We can tell you from first-hand experience the IRS has become almost dysfunctional when we try to respond to correspondence audits.

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. 331 | Additional Inflation Adjusted Tax Limits December 2, 2015

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

Tax Tip of the Week | December 2, 2015 | No. 331 | Additional Inflation Adjusted Tax Limits

A couple of months ago (TTW # 322) we took a look at some of the inflation adjusted limits you will see when filing your 2016 taxes.  The IRS recently issued the following announcement:

The IRS has announced additional annual inflation adjustments for more than 50 tax provisions for 2016, including the tax rate schedules and other tax changes.

Revenue Procedure 2015-53 provides details about these annual adjustments, including:

For tax year 2016 participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,250, up from $2,200 for tax year 2015, but not more than $3,350, up from $3,300 for tax year 2015.

For self-only coverage the maximum out-of-pocket expense amount remains at $4,450. For tax year 2016 participants with family coverage, the floor for the annual deductible remains at $4,450; the deductible cannot be more than $6,700, up $50 from the limit for tax year 2015. For family coverage, the out-of-pocket expense limit remains at $8,150.

Among other new limits:

• The AGI amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $111,000, up from $110,000 for tax year 2015.

• The foreign earned income exclusion is $101,300, up from $100,800.

• Estates of decedents who die during 2016 have a basic exclusion amount of $5.45 million, up from a total of $5.43 million for estates of decedents who died in 2015.

We’ll keep you posted on other changes as they occur.

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.