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Mid Year Tax Moves

 
  beach


It's officially summer!

Fun for time on the beach and fun making mid-year tax moves.

With five months left in the tax year, it's the perfect time to make some tax moves that could reduce your 2017 tax bill. Here are five easy ones to take care of in July.

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1. Adjust your payroll withholding
Did you get a big tax refund this year? Or did you owe Uncle Sam more than you expected? Either situation means that you need to reassess your payroll withholding. It's easy to do. Just give your payroll administrator a new W-4. You should look into whether you need to adjust your withholding at the start of each year, or during a midyear tax review or any time that your personal or financial situations change.

I know that it's tempting and easy to use payroll withholding as forced savings so you get a tax refund every year. But that's your money that you could have been using throughout the year. And with interest rates finally creeping up, note that Uncle Sam doesn't pay any interest on the money you let him hold onto for months.


2. Contribute to your retirement accounts
If your payroll withholding change means you're getting a bit more cash each paycheck, consider putting that — and maybe more — into a retirement plan. Yes, one day you will want to quit working and you'll be glad you saved so you can enjoy your post-work years.

The sooner you start socking away cash in your workplace 401(k) plan or (or in addition to) a Roth or traditional IRA, the sooner you can make that happen on your terms.


3. Donate to charity
You missed spring cleaning? No worries. Take care of it now, especially emptying out your closet of clothes you no longer want. Someone else might, like the shoppers looking for items they need at your favorite nonprofit thrift store.

Summer is a slow time for charities when it comes to contributions, but the organizations must meet the needs of those who depend on their services year round. Your midyear donations of household goods as well as clothes will be very welcome. And the gifts are just as tax deductible as long as you follow the tax code's giving rules.


4. Assess your investments
The stock market is on a tear, so it's a good time to look at how your investments have been doing. It might be time to sell some assets that have appreciated nicely.

There will be tax ramifications. But if you're like me, you're in a low enough tax bracket so that any investment income — qualified dividends, capital gains distributions or capital gains if you make a profit on an asset's sale — will be taxed at a maximum 15 percent rate. Some folks won't face any capital gains taxes at all.


5. Set up a bunching strategy

bunching strategy will help you have enough qualified expenses to meet some of the itemized deduction thresholds. These are percentages of your adjusted gross income you must exceed to be able to deduct any of the expenses. The hurdles are 10 percent for medical costs and 2 percent for miscellaneous expenses. If you don't exceed those percentages, all your receipt keeping and expense tracking is for naught.

A bunching strategy will help make sure that you don't keep getting close, but never quite have enough expenses to deduct. Basically, you push or pull as many of your allowable expenses as you can into one tax year. You can, for example, delay some medical procedures so that you'll incur them the next year when they'll be more tax valuable. Or you can join a few more professional organizations sooner rather than later to deduct them this year. Or vice versa.

  

Have Tax Questions?  

Contact Us Today and One Of Our Staff Member Will Be Happy To Help!

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Earlier Due Dates for Forms 1099-MISC and W-2

unnamedWhen a business pays non-employee compensation aggregating to $600 or more to a single payee in a tax year, the business must file a Form 1099-MISC to report the payments to the IRS. Similarly, employers must report wages paid to employees on Forms W-2. Copies of these forms (called payee statements) must also be supplied to payment recipients. 

Before a law passed last year, Forms 1099-MISC and W-2 were required to be filed with the IRS and the Social Security Administration (SSA) by the last day of February or by March 31 if filed electronically. (See "Two Laws Are Responsible for the Changes" at right.) Now, the due dates have been accelerated.

Starting with returns for the 2016 calendar year (which must be filed in early 2017), the due date for IRS and SSA filings is advanced to January 31 of the following year. The March 31 due date for electronic filings is no longer available. So the deadline for filing 2016 Forms 1099-MISC and W-2 with the IRS and the SSA is January 31, 2017.

Note: For filing 2016 Forms 1099-MISC and W-2 with the IRS and the SSA, one 30-day extension is allowed. To obtain an extension, you must file Form 8809, "Application for Extension of Time to File Information Returns," by no later than January 31.

The deadline to supply payee statements to recipients remains January 31 with no extensions allowed.

Reason for the New W-2 and 1099 Deadline

The goal of the new earlier deadline is to:

  • Give the IRS more time to spot errors on tax returns.
  • Make it easier for the tax agency to verify the legitimacy of returns and properly issue refunds to taxpayers eligible to receive them.

 

Reducing tax refund fraud has been a priority of the federal government in recent years.

Later Due Dates for 2016 Corporate Federal Income Tax Returns

For many years, C corporation federal income tax returns on Form 1120 were due two and a half months after the end of the corporation's taxable year (March 15, adjusted for weekends and holidays, for a calendar-year corporation). Form 1120 could be automatically extended for six months (through September 15, adjusted for weekends and holidays, for a calendar-year corporation).

However, a law passed last year established new due dates for Form 1120. For tax years beginning after December 31, 2015, the due date is generally moved back one month to three and a half months after the close of the corporation's tax year (to April 15, adjusted for weekends and holidays, for a calendar-year corporation).

Automatic five-month extensions are allowed (to September 15, adjusted for weekends and holidays, for a calendar-year corporation). You must file Form 7004, "Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns," to obtain an automatic extension.

The Form 1120S due date for S corporations is unchanged.

Note: Under a special transition rule for C corporations with fiscal years ending on June 30, the due date change won't kick in until tax years beginning after 2025. Until then, the traditional due date of September 15 (adjusted for weekends and holidays) for these corporations will continue to apply, with automatic seven-month extensions allowed.

Earlier Due Dates for 2016 Partnership and LLC Returns

For many years, partnership federal income tax returns on Form 1065 have been due three and a half months after the end of the partnership tax year. So for a calendar-year partnership, the filing deadline was April 15 of the following year (adjusted for weekends and holidays).

The Form 1065 due dates have also now been changed. For partnership tax years beginning after December 31, 2015, the Form 1065 due date is accelerated by one month, to two and a half months after the close of the partnership's tax year (March 15 for calendar-year partnerships). The same deadline applies to limited liability companies (LLCs) that are treated as partnerships for federal tax purposes.

Automatic six-month extensions are allowed (to September 15, adjusted for weekends and holidays, for a calendar-year partnership or LLC). File Form 7004 to obtain an automatic extension.

Need Help with Compliance?

If you have questions about the new filing deadlines for tax returns or information returns, or you want to file an extension, contact us today.

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Time

Time

It’s the one universal thing we all share, no one person gets anymore or any less. Every night at midnight we are given 24 hours, how we treat them is what makes us diverse.

You know the saying “Time is on my side” well for me time is never on my side.  I never have enough of it and I usually try to steal it, let me explain.  I always set my clocks 10 minutes ahead, same with my alarms.  I say alarms because I set one for just about everything.  Picking up kids…alarm is set 10 minutes before it should be so I can be extra ready, waking up…same thing, alarm is set with a 10 minute “cushion”. Heck the ring tone for my alarm is the theme song for the 80’s classic Back to the Future, “Back in Time”, by Huey Lewis and the News.

If someone says “hey what time is it” my response would be “oh its 2’oclock, in reality its 1:27pm.  To me you’re always moving forward so you’re always closer to 2 because you can never get that time back.  You can’t “catch up” on time.  You can’t say “I’m going to catch up on some laundry or catch up on some reading.  There is no “catching up” you can’t go back and get that time again.

Now there are the other people, the time eaters, the procrastinators, the time thieves that rob people of their precious minutes.  They steal a couple minutes here and a couple second there, which eventually turn into hours lost.  Everyone knows this person…the one that is constantly late to meetings, always comes home late because they started their day out late.  They say:  “Hey, you got a minute?” or “Can I borrow you for a second?” I want to say “NO, I don’t have a minute or a second that I can spare, I only have been given so many, 1440 minutes or 86,400 seconds and they are precious to me.”   I think the time thieves don’t even know they are taking away from my 24 hours.  If these thieves steal my time then I am going to have to take time away from something that was significant to me.

I think punctuality is something that is instilled in us at an early age.  Our parents teach us that the early bird gets the worm or early to be early to rise make a man healthy wealthy and wise, don’t put off tomorrow what you could get done today.  I have 2 young girls and I know for certain I have instilled in them the importance of respecting the clock.  If you can learn to respect time then in the end you are also respecting everyone else’s time.

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Ashleigh Lawhorn
Firm Administrator
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The Department of Labor’s OT Ruling is on HOLD!

On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation.

As employers have been scrambling to review job descriptions and salaries before the December 1, 2016 deadline, a US Court judge puts the Department of Labor’s rules on hold. A group of states filed a lawsuit stating that the Department of labor’s OT rule overstepped the government’s authority.

So, where does that leave employers today? Employers must weigh various business and legal risks in deciding whether to comply with the now enjoined overtime regulations. There is a legal risk that if the regulations are later upheld, they may be enforced retroactively. In that event, employers may be liable for overtime payments to employees who were classified as exempt under the current regulations but who are not exempt under the new regulations, plus potential attorneys’ fees. In the event of such a litigation attempting retroactive enforcement of the overtime rule, employers will have difficulty defending against claims if they do not have accurate records of the hours worked by employees. So, an employer that decides to hold off on complying with the new regulations may want to keep accurate records of the hours worked by any employee who is now considered exempt but could be considered non-exempt under the new regulations.

Of course, any appeal of this judge’s ruling will fall to the new Trump administration, which may not be as motivated to enforce these Obama administration regulations. That remains to be seen. In the meantime, employers will have to decide whether to put their compliance plans on hold in light of the ruling.

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Lisa Ingle
HR Manager
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Client Appreciation Day 2015

Client Appreciation Day 2015

Tax Day Sweepstakes 2015 Rules



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