Allison L Cook CPAs PC

IRS delays employer deadline to provide small employer HRA notice to employees. Generally effective for years beginning after Dec. 31, 2016, an eligible employer—generally, an employer with fewer than 50 full-time employees, including full-time equivalent employees, that does not offer a group health plan to any of its employees—may provide a qualified small employer health reimbursement arragement (HRA) to its eligible employees, and such an HRA won't be treated as a group health plan. Thus, a qualified small employer HRA isn't subject to the tax law's group health plan requirements, including the portability, access, and renewability requirements of the Affordable Care Act (ACA, also known as Obamacare). HRAs are arrangements under which an employer agrees to reimburse medical expenses including health insurance premiums up to a certain amount per year, with unused amounts available to reimburse medical expenses in future years. The reimbursement is excludable from the employee's income.
The qualified small employer HRA rules generally require an eligible employer to furnish a written notice to its eligible employees at least 90 days before the beginning of a year for which the HRA is provided (or, in the case of an employee who is not eligible to participate in the arrangement as of the beginning of such year, the date on which the employee is first so eligible). However, under interim guidance from the IRS, an eligible employer that provides a qualified small employer HRA to its eligible employees for a year beginning in 2017 isn't required to furnish the initial written notice to those employees until after further guidance has been issued by the IRS. That further guidance will specify a deadline for providing the initial written notice that is no earlier than 90 days following the issuance of that guidance.

What do You do if You Receive an Incorrect 1099
Friday, February 3, 2017

Here are the steps and points to remember.

1) First you should contact the business or individual who sent you the 1099 and explain why you think it is incorrect.

2) The IRS says if you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.

3) If the amount is less than $600 you should not be receiving a 1099. The amount of income received still needs to be reported.

4) It is important to remember if you do not receive a 1099 but should have you are still required to report the income.

5) It is important to remember if the amount on a 1099 received is under reported you are required to report the correct amount as income.

New Tax Return Due Dates for Partnerships and Corporations!

Tuesday, December 27, 2016

Form 1040, 1040a and 1040ez the dates have not changed although the due date is April 18th,2017 because April 15th falls on a Saturday and the Washington DC holiday Emancipation Day is on Monday.

Partnership returns (Form 1065) are due on March 15th, 2017 while in previous years they were due on April 15th.

C-Corporation returns (Form 1120) are due on April 18th 2017 while in previous years they were due on March 15th.

S-Corporation returns (Form 1120S) are still due on March 15th.

The Estate and Trust return (form 1041) due date remain unchanged although this year the date is April 18th, 2017.

2017 Standard Mileage Rates for Business, Medical and Moving Announced
Wednesday, December 14, 2016

The Internal Revenue Service has issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

53.5 cents per mile for business miles driven, down from 54 cents for 2016
17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
14 cents per mile driven in service of charitable organizations
The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

This is an Important Year for Tax Planning
Thursday, December 8, 2016

The traditional rules of postponing income and accelerating expenses could be even more important for some taxpayers than in previous years.

President elect Trump has proposed lowering the top tax rate from 39.6% to 33% and replacing the current brackets which range from 10 percent to 39.6 percent, with three brackets of 12 percent, 25 percent and 33 percent.

A couple of other proposed changes are:

Replace the current personal exemption and standard deduction with a new standard deduction of $30,000 for married filers and $15,000 for single filers.

Repeal the Net Investment Income Tax, which is an additional 2.3 percent tax on net investment income.

A new deduction for child care costs, up to an amount equal to the average cost of care in your state, allow a tax credit of up to $1,200 for child care expenses to lower-income families and create new savings accounts for care of children or elderly parents. Currently there is a credit for child care expenses.

Reduce the top tax rate on corporations to 15%.

At this point it is impossible to tell exactly what is coming but it is pretty certain there will be major changes .

So with that in mind here are a bakers dozen of tax planning tips

Take full advantage of 401K plans and IRA deductions.
Donate to charity before the year end if you will itemize deductions. Contributions paid by credit card before year end are deductible even before you have paid the credit card bill.
Donate non cash goods before year end. If the total is over $500 special reporting requirements are required (Form 8283).
If you are making state estimated payments consider paying next year’s January payment at the end of the current year.
Accelerate payment of other itemized deductions.
If a property tax payment is not due until early next year consider paying before year end.
If you have high medical and dental expenses pay any bills before the end of the year. This only applies if your total medical expenses will be more than 10% of your total income.
If you have capital gains consider selling stocks that have lost money to offset these gains.
Defer income if possible into the next year if possible.
Accelerate business deductions if you have net income.
Pay college tuition before year end if you have not reached the maximum allowed for deductions and credits.
Make sure you have taken any required minimum distributions (RMDs) from retirement plans if you are over 70 ½. The penalty is onerous.
Watch out for the Alternative Minimum Tax (AMT) because some deductions (for example property taxes) can increase AMT and end up not helping you.
If you have a gifting strategy make sure all gifts are made before the year end. An individual can gift $14,000 tax free to each recipient.
This year more than ever Consult Your Tax Professional. Many of these strategies can be complicated.
Selling losing stocks may not be a good strategy depending upon numerous other factors. Some of these factors are your capital gains tax rate, expectations for the stock in the future , etc.
If you expect to earn less the next year accelerating deductions and postponing income may not save you money depending upon your tax bracket and more.
See number 9. Depending upon your income you may not qualify for education credits or deductions.
See number 11. The Alternative Minimum Tax is a very tricky subject to say the least. According to proposals the AMT may be repealed.