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Moving on to a CPA to get your taxes filed? Buying a new home? Need a loan to start a business? Know an independent student in need of financial aid? Often times you’ll need your prior years’ tax returns to provide prior records, prove income or display need for financial aid. If you are unable to find or retrieve your records from wherever you normally store them you can request a transcript from the IRS with the tax information you need or a copy of the tax return. The IRS has temporarily stopped the online functionality of the Get Transcript application process, however, you can still use it to get a copy mailed to the last address that was on file with the IRS. You can also send via fax or mail a 4506T-EZ for an Individual Tax Return Transcript. Use form 4506-T for Businesses or Individuals who need a tax account transcript.
You can read more here at the IRS website:
The ACA has many implications for employers but most of them are for large employers called Applicable Large Employers or ALE's. These are companies that have more than 50 full-time employees. ALE's with 100 or more full-time employees, effective tax year 2015, are subject to the employer shared responsibility provision which requires them to make a shared responsibility payment.
All employers that provide self-insured health insurance must file a return annually which reports information on the individuals they cover. The forms for tax year 2015 will be filed in 2016.
You may be wondering, what qualifies as 50 full-time employees. As defined by the ACA, 50 employees is the number of full-time employees of every month added up over the calendar year and divided by 12. This is how you will determine whether or not the company is eligible to qualify as an ALE in the next year. It is important that employers know that if the 50 limit threshold is exceeded in this calendar year for example, the 50 full-time limit will apply to them in 2016. In other words, the limit is determined by the preceding year.
Employers which are smaller than 50 full-time employees or at exactly 50 full-time employees are allowed to purchase health cover through the Small Business Health Options Program also known as the SHOP Marketplace. Employers with more than 50 employees do not qualify for the SHOP Marketplace.
For more information on the ACA and its effect on employers you can visit the IRS website at the link below:
Do you know what all is considered taxable income? The easy answer would be that all income is taxable unless the law specifically says it is not. You’re probably saying to yourself, duh, but there’s more to it than that. Taxable income can be any number of sources of money such as wages and tips. However, taxable income also includes non-cash income from services or tangible goods or property. Here’s an example: Jimmy wants to have his deck repaired in the back of his house but can only offer the repair man, Joe, a tangible good in exchange for his services. Jimmy ends up giving him a motorcycle in his garage. Joe, has to record the fair market value of the motorcycle as income for payment of his services. Another scenario would be where they exchange both of their services in which they would both record the fair market of the services received as income.
Other sources of income that are typically not taxable include
· Gifts and Inheritances
· Damage Awards for Physical injury or sickness
· Child Support payments
· Welfare Benefits
· Reimbursements for qualified adoption expenses
· Cash rebates from a dealer or manufacturer for an item you buy
There are also other sources that are not taxable except under certain conditions. Some examples include:
· Life Insurance proceeds
· State or Local income tax refund
· Income from a qualified scholarship
· Bartering Income is Income and is taxable
Let’s first define bartering which is the trading of one product or service for another. One might see that bartering frequently occurs in small businesses. An example might be an Information Technology consultant trading his skills for a plumber to do work in his kitchen. By bartering, the value of products or services which are received are considered taxable income. Here are a few things you should be aware of for bartering income:
· Trade and barter dollars are the same as real dollars for tax purpose and need to be reported on a tax return. Both parties must report as income the fair market value of the product or service they receive.
· Just like a constructively received income, bartering is taxable in the year it occurs. The tax rules vary based on the type of bartering that takes place. The barterer may owe income taxes, self-employment taxes, employment taxes or excise taxes on their bartering income.
· If you are in a business or trade you would normally report it on Form 1040, Schedule C, or Loss from Business.
· Also, be aware that if you go to a barter exchange, an organized marketplace where members barter products or services, it is required to issue Form 1099-B , Proceeds from Broker and Barter Exchange Transactions. The exchange must give a copy of the form to its members and to the IRS.
The Affordable Care Act has affected the way we do business and if you’re self-employed or run a small business there are a few things you should know that affect you:
If you are self-employed meaning that you run a business with no employees and you earn an income, then you can get coverage through the Healthcare Marketplace. Even if you already have individual insurance, which is a plan you bought on your own, you still might be able to switch over to a Marketplace healthcare plan.
Small businesses are classified as having 50 or fewer full time equivalent employees under the health care law. As a small business you may get insurance for your employees (including yourself) through the SHOP (Small Business Health Options Programs Marketplace). In 2016 the SHOP will be available to businesses with 100 or fewer full time equivalent employees.
As an employer you must give notifications to your employees of the coverage you allowing your employees to take part in that are part of the Marketplace. If you implement this mid-year, you must notify all current employees regardless of the plan status or their full or part time status.
If you are a small business with less than 25 employees, you may be able to qualify for a Small Business Tax Credit as a direct result of your plan options.
The Small Business Tax Credit applies to companies that pay full time employees an average of $51000 or less and pay at least half of the premiums for employee health insurance coverage. The credit given is equivalent to 50% of the contribution toward the premiums paid for the employees (up to 35% for tax exempt employers). Companies receive the highest tax credit if they have fewer than 10 employees of which are paid an average of $25000 or less.
For those businesses not offering minimum essential coverage with 100 or more full time equivalent employees will have a tax levied starting 2015. Starting 2016 employers with at least 50 employees but fewer than 100 will have an obligation to the additional tax. This additional tax is known as the Employer Shared Responsibility Payment and is determined partly by whether you offer insurance or meet the minimum requirements.
If you have questions regarding what the best option might be for you, please contact us. Figuring out exactly what plan may be best for your company can be a complicated and costly decision. You should therefore receive proper guidance from our professional staff before ultimately coming to a conclusion.
There are many ways to start a college fund for your child. The two most common methods are Qualified Tuition Programs or Coverdell Education Savings Accounts. It is best to start these when the child is young as these programs gain interest and it makes it easier to reach the financial goal by starting earlier.
You can calculate the average cost of your child’s college by taking into account the annual increase of inflation adjusted average tuition and fees for both public universities and colleges. Expect to pay more if your child is going to a private university as private universities have larger tuition fees.
Qualified Tuition Plans also known as 529 plans, are often the best choice for many families. Every state has a program to prepay future higher education that allows for tax relief. For one, a prepaid education arrangement is essentially a plan that buys your child’s education at today’s costs through the purchase of education credits or certificates. This type usually limits the student’s choice of schools to those within the state but both private and public are available under this plan. With an Education Savings Account you can make contributions to an account that is going to be used for future higher education.
Unlike some other tax-favored higher education programs a 529 plan doesn’t limit the benefit to just tuition but extends it out to room, board, and books.
When setting up an account, remember that there is the account owner and the beneficiary which is the individual that will be receiving the benefits of the college fund. Remember that you can only have one beneficiary per account so if you have more than one child you would want to set up more than one account.
Unfortunately, contributions made by an account owner are not tax deductible for federal income tax purposes, however, distributions from the fund are tax-free to the extent they are used for qualified higher education expenses. If distributions are used in other ways they are taxable only on the portions that represent earnings.
If you have more questions on this topic feel free to call us.
Did you know that Bitcoins ARE taxable? Here’s how.
More and more individuals are using bitcoin as an acceptable form of payment for goods or services, particularly for the sale of goods and services online. The IRS tax code says that these bitcoins are taxable to the fair market value (in USD) of the day that the bitcoins were received in exchange for the goods or services.
On top of that, the taxpayer can have a gain or loss upon an exchange of the currency for other property. The way this works is similar to the stock market. For instance, people who own stocks consider them a capital asset. When bitcoins are recognized as capital assets they can recognize a capital gain or loss upon the exchange of bitcoins for property in relation to its adjusted basis.
Taxation-wise bitcoins are treated as property so you may want to have your CPA or local tax preparer familiar with these regulations prepare your return. That being said, if you haven’t already decided to let a tax professional handle your tax return, you may want to do so now.
Source: Keith A. Aqui. Notice 2014-21. Internal Revenue Service. <http://www.irs.gov/pub/irs-drop/N-14-21.pdf>