Category Archives: Small Business

Tax Season Starts!

Tuesday January 19, 2015, is the official start of Tax Season.

That is when the IRS starts accepting electronically filed returns.

This year tax season lasts longer than any ever.

Why – First – this a leap year so there are 29 days in February.

Friday – April 15 is a Holiday – Emancipation Day – taxes are never due on a Holiday, so that would make the due date – the next Monday – thus making taxes due:

Monday April 18, 2016

Happy Tax Season!

Congress Passes PATH – President Signs

 

Before Christmas of 2015 Congress passed and the President signed the Protecting Americans from Tax Hikes Act of 2015 (PATH)

This bill not only extended many tax laws that had actually expired at the end of 2014, some of the items were made permanent.

The biggest business clause in the bill is to make permanent the maximum that small business can expense in capital equipment.  The amount is back to $500,000.  This amount would have fallen to $25,000 had the bill not passed.

For individuals there were many smaller provisions, many which were made permanent.

The Teacher deduction credit was renewed and actually has an inflation adjustment, in case inflation should ever become excessive.

For taxpayers itemizing deductions they can again choose they greater on State & Local Income Tax – or sales tax – whichever is greater.

Individuals may make direct transfers to charity.

The American Opportunity Credit was renewed

Some items were renewed – but only thru the end tax year 2016.

These include the mortgage insurance deduction, the residential mortgage credit, and the tuition deduction.

All together there are over 50 clauses in the bill.  For details of how this bill affects you, please discuss the provisions with your tax preparer.

 

2016 Mileage Rates

The IRS has reduced mileage rates for 2016.

Business Rate

For taxpayers using their personal vehicle for business purposes, the mileage rate in 2014 was 56 cents a mile, in 2015 the rate increased to 57.5 per mile.

For 2016 primarily as a result of lower fuel costs the rate is reduced to 54 cents per mile.

Medical/Moving

The rate relating to medical or moving was 23.5 cents per mile in 2014 and 23.0 cents per in 2015.  The rate for 2016 is 19 cents per mile.

Charitable Rate

The rate for mileage related to Charitable Contributions is set by Congress, rather than the IRS, and remains at 14 cents per mile.

 

State Tax Amnesty – Kansas – Missouri

Owe back taxes to Kansas or Missouri?

Want to pay your delinquent taxes – and want to avoid the penalties and interest?

The State Legislatures of Kansas and Missouri have both recently passed legislation establishing periods when delinquent taxes can be paid in full, with no interest and/or penalties.

The types of taxes eligible include:

  • Individual Income
  • Business Income
  • State and Local Sales Tax
  • State and Local Use Tax
  • Employers Withholding Tax
  • Corporation Franchise Tax

Taxes due prior to 12/31/14 are eligible for the amnesty.

To take advantage of the amnesty –  all taxes of a type must be paid during the amnesty period.

The amnesty period is:

  • Missouri – 9/1/15 thru 11/30/15
  • Kansas   – 9/1/15 thru 10/15/15

If you owe Missouri delinquent taxes that are eligible for the amnesty, Missouri will send a notice with the application for amnesty.

No word yet on the Kansas procedure to apply for the amnesty

 

 

 

New Years – Wages Increase

Missouri’s low paid workers are getting a raise.

Starting New Year’s Day the minimum wage in Missouri will increase to $7.65 an hour.  This an increase from the $7.50 rate in 2014.

The rate for tipped workers in Missouri will rise to $3.83, an increase of 9 cents.

A law passed in 2006 provides an annual cost-of-living adjustment to Missouri’s minimum wage.

 

 

Congress Passes Extenders

photo credit: JeepersMedia via photopin cc

photo credit: JeepersMedia via photopin cc

Congress will have the “dubious distinction” of starting next year with all of the provisions expired, said Senator Orrin Hatch, a Utah Republican who is poised to become chairman of the Senate Finance Committee in January.

“Never in the history of tax legislation have so many voted for so little and been so disappointed,” he said.

On December 16, 2014 Congress passed, and shortly thereafter President Obama signed the Tax extenders package – The Tax Increase Prevention Act of 2014.

The bill extended over 50 provisions – that had actually expired on December 31, 2013.  Now these provisions were extended for 2014 – but only until December 31, 2014.  Thus they all expire again in less than two weeks.

Items extended included:

The election to claim an itemized deduction for state & local sales tax (if greater than state & local sales tax)

The Higher education Deduction

Teachers Classroom Expense Deduction – still limited to $250

Exclusion of Cancellation of Mortgage Debt – from Income

Ability to deduct Mortgage Insurance Premiums as interest

Businesses can again Write-off Asset purchases up to $500,000 under section 179

Since all of these provisions now expire in just a few days, it will be up to the new Congress to take action on them sometime during 2015 – or not!

If you want more details on the other provisions, please contact BDS.

photo credit: peachsmack via photopin cc

photo credit: peachsmack via photopin cc

2015 Mileage Rates

The IRS has announced the mileage rates for 2015.

Even thought fuel prices continue to decline, and are approaching $2,00 a gallon.  The mileage rate for 2015 is 57.5 an increase from 56 cents per mile in 2014.  This is the rate to use foe business miles.

The rate for medical and moving mileage will decline in 2015 to 23 cents a mile.

The rate to use when using your vehicle related to charity is set by congress (not the IRS) and remains at 14 cents per mile.

Should you have questions, you should contact BDS, or your tax professional.

 

 

IRS Develops “Bill of Rights”

Since 2007 (seven years ago) adopting a Taxpayer Bill of Rights has been a goal of the National Taxpayer Advocate. This goal was listed as the advocate’s top priority in her most recent Annual Report to Congress.

photo credit: Thomas Ormston via photopin cc

photo credit: Thomas Ormston via photopin cc

The Taxpayer Bill of Rights was adopted in June 2014.

Taxpayer Bill of Rights contains 10 provisions. They are:

  1. The Right to Be Informed
  2. The Right to Quality Service
  3. The Right to Pay No More than the Correct Amount of Tax
  4. The Right to Challenge the IRS’s Position and Be Heard
  5. The Right to Appeal an IRS Decision in an Independent Forum
  6. The Right to Finality
  7. The Right to Privacy
  8. The Right to Confidentiality
  9. The Right to Retain Representation
  10. The Right to a Fair and Just Tax System

Further explanation on each of the Rights:

1) The Right to Be Informed. Taxpayers have the right to know what they need to do
to comply with the tax laws. They are entitled to clear explanations of the laws and IRS
procedures in all tax forms, instructions, publications, notices, and correspondence. They
have the right to be informed of IRS decisions about their tax accounts and to receive
clear explanations of the outcomes.

2) The Right to Quality Service. Taxpayers have the right to receive prompt, courteous,
and professional assistance in their dealings with the IRS, to be spoken to in a way they
can easily understand, to receive clear and easily understandable communications from
the IRS, and to speak to a supervisor about inadequate service.

3) The Right to Pay No More than the Correct Amount of Tax. Taxpayers have the
right to pay only the amount of tax legally due, including interest and penalties, and to
have the IRS apply all tax payments properly.

4) The Right to Challenge the IRS’ Position and Be Heard. Taxpayers have the right
to raise objections and provide additional documentation in response to formal IRS actions
or proposed actions, to expect that the IRS will consider their timely objections and
documentation promptly and fairly, and to receive a response if the IRS does not agree
with their position.

5) The Right to Appeal an IRS Decision in an Independent Forum. Taxpayers are
entitled to a fair and impartial administrative appeal of most IRS decisions, including
many penalties, and have the right to receive a written response regarding the Office of
Appeals’ decision. Taxpayers generally have the right to take their cases to court.

6) The Right to Finality. Taxpayers have the right to know the maximum amount of time
they have to challenge the IRS’ position as well as the maximum amount of time the IRS
has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know
when the IRS has finished an audit.

7) The Right to Privacy. Taxpayers have the right to expect that any IRS inquiry, examination,
or enforcement action will comply with the law and be no more intrusive than
necessary, and will respect all due process rights, including search and seizure protections
and will provide, where applicable, a collection due process hearing.

8) The Right to Confidentiality. Taxpayers have the right to expect that any information
they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law.
Taxpayers have the right to expect appropriate action will be taken against employees,
return preparers, and others who wrongfully use or disclose taxpayer return information.

9) The Right to Retain Representation. Taxpayers have the right to retain an authorized
representative of their choice to represent them in their dealings with the IRS. Taxpayers
have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot
afford representation.

10) The Right to a Fair and Just Tax System. Taxpayers have the right to expect the tax
system to consider facts and circumstances that might affect their underlying liabilities,
ability to pay, or ability to provide information timely. Taxpayers have the right to receive
assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty
or if the IRS has not resolved their tax issues properly and timely through its normal channels.

 

 

photo credit: ChrisM70 via photopin cc

photo credit: ChrisM70 via photopin cc

Paying the IRS – Direct Pay

For years you have been able to pay your credit card bills, utility bills, mortgage, rent, and practically anything else online – but not the IRS.

photo credit: Mark Fidelman via photopin cc

photo credit: Mark Fidelman via photopin cc

Now the IRS has developed a method to make online payments.  It is called IRS “Direct Pay”

It is only designed for individual (1040) payments.

The website is:  www.directpay.irs.gov.

For prior years (1993 – 2013) you can pay:

  • Installment Agreement payments
  • Tax Return Payments
  • Proposed Tax Assessment Payments
  • Amended Return Payments

For last year you can make payments related to filing an extension.

For the current year you can make estimated tax payments

After entering the Direct Pay website you need verify personal information – name, address, date of birth, and a recent year’s filing status.

You then enter the payment amount and reason for payment.

Payments can be set up to pay any of the next 30 days and can be made from any bank account (checking or saving) – but cannot be made with a credit card.

You will not receive confirmation, If you want a copy you must print it

They do not ask for e-mail address and they state they do not retain your bank account info – once the payment is made.

Future plans include options for e-mail confirmation and a one-time registration.

photo credit: arsheffield via photopin cc

photo credit: arsheffield via photopin cc

 

Receiving IRS Transcripts

Now can obtain IRS Transcripts of your account virtually instantly, online.

photo credit: DonkeyHotey via photopin cc

photo credit: DonkeyHotey via photopin cc

This are an valuable tool, if you are applying for a home loan, completing the FASTA, have outstanding IRS – or state Income Tax debt, completing an amended return, or just want to make sure returns are filed.

Transcripts Available:

There are four transcripts you can obtain.

Return Transcript:  This is the line by line listing of amounts on your return. Names, Social Security Numbers, Income, Exemptions, deductions, credits, withholding, and refund amounts are all shown. This is currently available for 2010, 2011. and 2012, and soon 2013. If you are completing an amended return, this tool will give you the information you need from the original return.  If you are completing the FASTA, this will give you all the information you need from your tax return.

Record of Account Transcript:  The Record of Account contains much of the same info as the Return Transcript. Record of Account Transcripts are available back to 2011.

Account Transcript:  This will give you all the payments applied to your account plus penalties, and interest. We find this transcript a good tool to verify that estimated payments were made and properly posted. Account Transcript are available back to 2005.

Wage & Income Transcript:  This will give you transcripts of all information the IRS has on your account. It includes W-2 from employers, 1099s showing amounts of bank interest, dividends, stock sales, and gambling winnings, 1098s showing amounts of mortgage interest paid, K-1s showing income from partnerships, trusts, and S-Corporations. This is a valuable tool when completing an older return that hasn’t been timely filed. Unfortunately it does not show state withholding on wages. The Wage & Income transcript is available back to 2004. The 2013 information will not be available until mid-summer 2014.

Getting Access

To get access to the transcripts you must create a user name and password, and you must have an e-mail account. After you set these up, you will receive an E-mail from the IRS.

After receiving the e-mail from the IRS (it should be quickly so if you don’t receive it in your in box – check your junk e-mail).  You will be asked a series of four questions to determine if you are authorized to see the info.

Then you be asked to set challenge questions so you can obtain access if you forget your passwords.

After setting the challenge questions, you will have access to the info.

photo credit: mtfrazier via photopin cc

photo credit: mtfrazier via photopin cc