Newsletters

What to do when excess social security tax is withheld

If you are switching jobs or working two jobs as an employee and your total wages for the calendar year will exceed the social security wage base ($132,900 in 2019), you may be overpaying social security tax.  Unfortunately, you cannot stop the withholding.  However, you will get a credit on your next tax return for any excess withheld. Each employer is obligated to withhold social security taxes from your wages.  The total they both can withhold may exceed the maximum amount of tax that can be imposed for the year….

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Updated individual returns – new “easy” return for seniors

The IRS has released a draft of the new simplified individual income tax form, Form 1040-SR. This form may be used by taxpayers 65 and over (senior taxpayers) for the tax year 2019 and future returns. It is similar to Form 1040-EZ but without the limitations that restricted the use of Form 1040-EZ.   The new form is two pages long and has larger font sizes. It also removes the shading around some of the boxes to improve contrast for taxpayers with declining vision. It is available for seniors of…

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Can I deduct business trip expenses for my spouse?

The rules for deducting a spouse’s travel costs are very restrictive. First of all, to qualify, your spouse must be your employee. This means you cannot deduct the travel costs of a spouse, even if his or her presence has a bona fide business purpose, unless the spouse is a bona fide employee of your business. This requirement prevents deductibility in many cases. If your spouse is your employee, then you can deduct his or her travel costs if his or her presence on the trip serves a bona fide…

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Tax Filing Reminders

September 16th 2019 calendar-year corporations third installment of estimated income tax 2019 individual and trust third installment of estimated income tax 2018 calendar-year S corporation income tax return (Form 1120S) on extension 2018 calendar-year partnership income tax return (Form 1065) on extension September 30th 2018 estate and trust income tax return (Form 1041) on extension October 15th 2018 calendar-year C corporation income tax return (Form 1120) on extension 2018 individual income tax return (Form 1040) on extension 2018 gift tax return (Form 709) on extension

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Tax Filing Reminders

July 31st   2018 calendar-year annual return/report of employee benefit plan (Form 5500) is due September 16th 2019 calendar-year corporations third installment of estimated income tax 2019 individual and trust third installment of estimated income tax 2018 calendar-year S corporation income tax return (Form 1120S) on extension 2018 calendar-year partnership income tax return (Form 1065) on extension September 30th 2018 estate and trust income tax return (Form 1041) on extension October 15th 2018 calendar-year C corporation income tax return (Form 1120) on extension 2018 individual income tax return (Form 1040) on extension…

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Fraud Detection and Prevention

Fraud may be committed by senior executives, managers, and employees, and each of these three groups is about equally likely to do so. The higher up on the scale, the longer it takes to detect the fraud. Why embezzlement occurs: Opportunity–a person who has been with the company a long time may not be supervised closely; and therefore, may have more opportunities to commit fraud. Rationalization–someone feels he or she is not being compensated appropriately, or has been passed over unfairly for a promotion. Pressure–financial pressure or the pressure to…

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Truncated Taxpayer Identification Numbers Allowed on 2020 Forms W-2

As part of its efforts to reduce the risk of identity theft, the IRS has now issued final regulations allowing employers to truncate employees’ identification numbers on the W-2 statements provided to them on paper or in electronic format after December 31, 2020. Truncated social security numbers have been allowed on certain payee statements for several years, including: Substitute and composite substitute statements Form 1095-C Form 1098 series (except Form 1098-C) Form 1099 series Form 5498 series Employers may replace the first five digits of the nine-digit number with an…

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Bipartisan IRS Reform Enacted

On July 1st, President Trump signed the Taxpayer First Act, a lengthy piece of bipartisan legislation containing a variety of pro-taxpayer reforms to the IRS. Read on for a quick overview of the various items included in the bill. Anti-Identity Theft Measures – The Taxpayer First Act requires the IRS to notify taxpayers if it detects or suspects fraudulent behavior associated with their identity. It mandates the creation of a single point of contact at the IRS for victims of identity theft. This agent is charged with tracking each case to…

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The 1031 Exchange: A Powerful Tool for Deferring Taxes

Sec. 1031 exchange activity has picked up considerably in recent years, as real estate sellers facing significant capital gains look for opportunities to soften the tax blow. By exchanging real property for other real property of “like kind,” owners can defer capital gains taxes until the replacement property is sold. The benefits of an exchange are substantial, because an outright sale of appreciated property can potentially trigger four levels of taxation: Federal income tax of 15% or 20%, depending on one’s tax bracket 25% tax on “recapture” of previous depreciation…

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Disaster Victims Qualify for Tax Relief

IRS has announced on its website that victims of severe storms and flooding in counties designated as federal disaster areas qualifying for individual assistance have more time to make tax payments and file returns. Certain other time-sensitive acts also are postponed. This article summarizes the relief that’s available and disaster area designations and extended filing and deposit dates. Who gets relief?  Only taxpayers considered to be affected taxpayers are eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts. Affected taxpayers include: Any individual…

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